Boost Your Income with Bank of America Stock
As the market continues to fluctuate, savvy investors are looking for ways to maximize their returns. One strategy that’s gaining popularity is selling covered calls on established stocks like Bank of America (BAC). With its strong performance over the past six months, rising over 10%, BAC presents an attractive opportunity for long-term investors.
A Strong Foundation
Bank of America stock is currently sitting above its 21-day exponential moving average, as well as the 50 and 200-day moving averages. A cup with handle has formed, creating a new buy point of 47.51. The company’s fourth-quarter earnings report showed a significant increase in revenue, up 15% to $25.3 billion, with earnings per share more than doubling to 82 cents.
Increasing Yield with Covered Calls
Savvy investors can significantly increase their yield from Bank of America shares using covered calls. By buying 100 shares of the underlying stock and simultaneously selling a call option against those shares, investors can limit their upside but increase their yield in the form of option premium. The investor keeps the premium generated from selling calls, no matter what happens with the stock.
A Longer-Term Approach
Instead of selling monthly calls, let’s explore selling longer-term covered calls against Bank of America stock. For example, a Jan. 16, 2026, expiring call option with a strike price of 50 recently sold for around $3.25, generating $325 in premium per contract. This creates a yield of 7.57% in 355 days, or 7.78% annualized, beating the dividend yield on most stocks in the current market.
Weighing the Pros and Cons
Before initiating a bullish trade like a covered call, investors should weigh the pros and cons of the stock. Remember that options are risky, and investors can lose 100% of their investment. It’s essential to do your own due diligence and consult your financial advisor before making any investment decisions.
Expert Insights
Gavin McMaster, a specialist in income trading using options, emphasizes the importance of patience in waiting for the best setups. With a Masters in Applied Finance and Investment, he believes that covered calls are a fantastic way to generate extra income from a stockholding while also providing some downside protection.
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