Exploring Put Options
As options for Ford Motor Co. (Symbol: F) spring forth for the April 12th expiration, investors have a novel avenue to tread. The $12.00 strike put contract beckons with a current bid of 24 cents, offering a unique proposition. By selling-to-open this put contract, investors would lock in purchasing the stock at $12.00 while pocketing the premium. Thus, the shares’ cost basis would stand at $11.76 (excluding broker commissions). This, to an investor eyeing F shares, could present an enticing alternative to the current $12.41/share price tag.
Nestled at an approximate 3% discount to the prevailing stock price, the $12.00 strike boasts an out-of-the-money status. Statistical indicators hint at a 99% likelihood that the put contract might expire worthless. Stock Options Channel plans to monitor this probability over time. An intriguing prospect arises if the contract does dissipate, with the premium translating into a 2.00% return on the cash commitment or a lofty 16.99% annualized – a figure dubbed the YieldBoost.
Uncovering Call Options
Shifting focus to the calls, the $12.50 strike call option emerges with a current bid of 46 cents, painting a tantalizing picture. By purchasing F shares at $12.41/share and subsequently venturing into a “covered call” sell-to-open deal at $12.50, investors commit to selling the stock if need be. The call seller stands to revel in a total return of 4.43%, excluding potential dividends if the stock gets exercised at the April 12th expiration (sans broker commissions). Yet, uncharted heights in F’s price trajectory could potentially be left untapped – underscoring the significance of scrutinizing the company’s trading history and fundamental underpinnings.
The covered call scenario, perched at an approximate 1% premium relative to the current stock price, bears the hallmark of being out-of-the-money. Analytical insights affirm a 99% chance that the covered call might expire without value. Stock Options Channel pledges to track the evolution of these odds over time, showcasing them through interactive charts. Should the covered call meet an uneventful demise, the premium would furnish a 3.71% bonus return to the investor or a robust 31.49% annualized, christened as the YieldBoost.
A Glimpse into Volatility
Meanwhile, a delve into the annals of history reveals the actual trailing twelve month volatility for F to be 34%, painting a vivid backdrop for investors. For further exploration into put and call options contract ideas, a visit to StockOptionsChannel.com stands as a prudent move.
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