New Options Unveiled
As of today, investors in Ford Motor Co. (Symbol: F) can begin trading new options set to expire on December 20th. These newly available contracts present a potential opportunity for sellers of puts or calls to achieve a premium higher than what would be available for contracts with a closer expiration, given that there are 343 days until expiration.
Potential for Sellers
One put contract at the $10.00 strike price has a current bid of 75 cents. Selling-to-open this put contract commits the investor to purchase the stock at $10.00 but also allows them to collect the premium, which would put the cost basis of the shares at $9.25 (before broker commissions). This could be an attractive alternative to buying the stock at $11.59/share today owing to its approximately 14% discount. The put contract also has the possibility of expiring worthless, with current odds indicating a 99% chance of doing so. Should it expire worthless, the premium would represent a 7.50% return on the cash commitment or 7.98% annualized, known as the “YieldBoost.”
Insights on Call Contracts
On the calls side of the option chain, the call contract at the $12.00 strike price has a current bid of $1.15. Should an investor purchase shares of F stock at the current price level of $11.59/share and then sell-to-open that call contract, they are committing to sell the stock at $12.00. YieldBoost. The call contract also has the potential to expire worthless, with current odds indicating a 99% chance of doing so. If it does, the premium would represent a 9.92% extra return to the investor, or 10.56% annualized, known as the “YieldBoost.”
Historical Context and Data
The $10.00 and $12.00 strike prices are delineated in a chart illustrating Ford Motor Co.’s trailing twelve-month trading history. This historical view is beneficial in assessing the potential outcomes of the options. Additionally, the actual trailing twelve-month volatility is calculated to be 35%, providing further insight for investors.
Also see:
Explore more put and call options contract ideas at StockOptionsChannel.com.
