With a yield of 3.84%, oversold shares of XOM trade at $103 a share. But what if you could collect a yield of about 3.42% and pay $12.35 a share with exposure to Exxon Mobil?

You’d jump at that opportunity, right?

Sure, you would. 

Look at the YieldMax XOM Option Income Strategy (SYM: XOMO), for example.

It yields 3.42% and pays a dividend every month.

And it does so by selling/writing call options on XOM.

While those may new terms for you, you don’t have to pay much attention to the options trading part of the trade. All you have to do is focus on making money from the appreciation and yield of the XOMO ETF.

Let’s say you invested $5,000 into XOMO for May.

On May 1, it traded at $12.36. A $5,000 investment would give you about 404 shares. As of May 28, the position is down about a penny a share for a loss of -0.08%.

However, you still made money from XOMO’s monthly dividend for May.

In fact, in May, XOMO paid out a dividend of $0.3976 per share. 

With 404 shares, you earned $160.63 in dividends, which you can now reinvest in XOMO – which is just starting to pivot higher from strong support at $12.20.

So, your total return estimate for the May would have been:

  • Capital loss of $4.04.
  • Dividend Income of $160.63.
  • Net gain May: $160.63 – $4.04 = $156.59.

But we believe you can do even better moving forward thanks to key catalysts impacting Exxon Mobil. For one, if things go awry between the U.S. and Iran regarding nuclear talks, Israel could strike Iran, as they’ve warned. In addition, we also have to consider we could see a bigger war over Ukraine. With Russia intensifying its attack on Ukraine, the U.S. is now reinforcing Europe’s Northern Front over fears of a greater war.

Sincerely,

Ian Cooper