Conoco Phillips gasoline station- by helen89 via iStock
ConocoPhillips stock (COP) is just off a three-month peak. That makes promoting COP lined calls with a one-month expiry enticing to shareholders. Here’s an instance: the $140 call expiring Sept. 25 yields 1.75%.
COP closed at $133.25 on Monday, Aug. 24, down just over 1%. It’s down from a 3-month peak of $134.89 on Aug. 20. That’s effectively over a current trough of $115.04 on Aug. 5.
More News from Barchart
COP stock – last 3 months – Barchart – Aug. 24, 2026
Investors appear to be betting that oil costs and the U.S.-Iran struggle will ease over the close to time period. For instance, the Sept. ’26 WTI Futures contract (CLU26) is at a near-term peak of $87.83 late Monday.
The last time oil costs were close to this peak, they subsequently declined as tensions eased. This is seen in the Barchart Crude Oil WTI Sept. ’26 futures chart below.
The level is that buyers are not involved that army motion or all-out struggle in the Middle East will flare up again. That is why COP stock has been rising, but it could later reverse, particularly if tensions rise with further U.S. and Iranian army motion.
As a outcome, it could make sense for current shareholders to take benefit of this by promoting out-of-the-money (OTM) lined calls.
Here is one play that is price contemplating.
Shorting COP Covered Calls
For instance, the Sept. 25 expiry call option chain exhibits that the $140.00 strike price has a midpoint premium of $2.33 per contract. That means that shopping for 100 shares of COP in the present day and then immediately promoting the $140 call option expiring in 32 days gives an investor a good yield:
$2.33 / $133.25 = 0.01748 = 1.75% for one month
COP calls expiring Sept. 25 – Barchart – As of Aug. 24, 2026
The level is that if an investor can repeat this every month for a yr, the expected return (ER) is high: 1.75% x 12 = 21.0%.
This also permits the investor to make up to an further 5.0% if COP rises to $140 on or before Sept. 25.
The backside line is that this is one approach current shareholders can earn additional income from proudly owning COP shares.
Shorting OTM Cash-Secured COP Puts
If the investor has further capital to invest, another enticing play is to promote out-of-the-money (OTM) cash-secured places. I mentioned this in my last Barchart article on COP on July 27.
For instance, the $114.00 put option expiring Aug. 28, on July 25, had a $2.90 premium. (The strike was just over 5% below the trading price of $120.26, so it was “out-of-the-money.”)
That meant the investor could short this premium and make an fast yield of 2.54% (i.e., $2.90/$114.00).
Today, the premium has fallen to just 8 cents on the bid aspect and 4 cents at the midpoint. The level is that most of the income has been earned and the investor can roll this over.
Here is a new and related play. The Sept. 25 expiry period exhibits that the $127.00 put option (i.e., 4.76% OTM) has a midpoint premium of $1.98. That means a short-seller can earn:
$1.98 / $127.00 = 1.559% 1-month yield
COP places expiring Sept. 25 – Barchart – As of Aug. 24, 2026
Moreover, the delta ratio for shorting this put option is very low, so the probability that the investor’s account would be assigned to buy 100 shares at $127 is low.
Combined Income Expected Returns
In addition, this short-put play can add to the investor’s lined call premium income. It also helps mitigate against any upside over $140 that would be forfeited if COP rises over that price.
For instance, the mixed income from shorting calls and places on Sept. 25 would be $233 +$198, or $431, for capital prices of $13,325 + $12,700, or $26,025 over 1 month.
That is 1.656% on average for the month, or an annualized ER of nearly 20% (i.e., 1.656% x 12 = 19.87%).
This is much higher than analysts expect from just proudly owning COP stock. For instance, Yahoo! Finance says the price goal from analysts is $145.33. That’s just 9.0% larger, much decrease than what an investor could make shorting places and calls every month for the next yr.
The backside line is that shorting out-of-the-money (OTM) lined calls and OTM places in COP stock could present good income and high expected returns.
On the date of publication, Mark R. Hake, CFA did not have (either immediately or not directly) positions in any of the securities talked about in this article. All data and information in this article is solely for informational functions. This article was initially revealed on Barchart.com
