10 BofA U.S. options overwriting ideas

BofA Securities analysts selected 10 overwriting candidates with at least 5% premium and 6% potential upside.

“Overwriting outperforms a long-only position if the underlying stock declines, but if the stock rises, it can underperform if the call strike is not sufficiently high,” wrote Arjun Goyal, equity-linked analyst at BofA.

He said that investors who may be concerned about missing out on the upside when overwriting could consider these candidates within the Russell 1000 (NYSEARCA:IWB) that may see at least 6% gain by Jan. 17, earn a minimum premium of 5%, and have underlying notional option volume of at least $5M.

Here are the candidates. All have a Jan. 17 expiration:

• Avis (CAR) – Strike: 105; Call and dividend premium: 5.4%; Call away return: 10.2%
• AppLovin (APP) – Strike: 350; Call and dividend premium: 7.7%; Call away return: 9.9%
• Micron Technology (MU) – Strike: 105; Call and dividend premium: 6.4%; Call away return: 8.5%
• Dexcom (DXCM) – Strike: 80; Call and dividend premium: 5.6%; Call away return: 7.6%
• Carnival (CCL) – Strike: 26; Call and dividend premium: 5.1%; Call away return: 7.5%
• United Airlines (UAL) – Strike: 97.5; Call and dividend premium: 6%; Call away return: 7.5%
• Coherent (CHR) – Strike: 105; Call and dividend premium: 5.9%; Call away return: 6.9%
• ARM (ARM) – Strike: 140; Call and dividend premium: 6.5%; Call away return: 6.8%
• Exact Sciences (EXAS) – Strike: 62.5; Call and dividend premium: 5.7%; Call away return: 6.8%
• Albemarle (ALB) – Strike: 110; Call and dividend premium: 6.4%; Call away return: 6.7%