Earn 14% on SCCO Stock Now with Covered Calls, Capping Upside at 18%

Southern Copper (SCCO) recently reported record-breaking financial results due to a historic surge in metal prices. The company's sales rose to $4.3 billion in the second quarter, with copper prices increasing by 40%. This has led to a significant increase in cash flow, which funds a massive project pipeline that promises to fuel growth for years.

However, despite the impressive quarterly results and rising commodity prices, Southern Copper's stock price is currently trading about 15% below its 52-week high. For investors who own SCCO shares, this presents an opportunity to earn a significant income now by selling covered calls.

A covered call involves selling one option on SCCO expiring July 16, 2027, with a strike price of $220, about 18% above the current price. The premium collected upfront is roughly $2,425 per contract, which can be kept regardless of what happens to the stock's price.

If SCCO finishes below $220 on July 16, 2027, the call expires worthless, and the investor keeps the full premium and all their shares. On the other hand, if SCCO finishes above $220, the investor's 100 shares are called away at $220, but they still keep the premium.