APA Corp Options Provide Interesting Investment Strategy for Investors

Investors in APA Corp (Symbol: APA) saw new options become available today for the April 11th expiration. At Stock Options Channel, our YieldBoost formula analyzed the APA options chain for the new April 11th contracts and identified a specific call contract worth noting.

Featured Call Contract Details

The call contract at the $25.50 strike price has a current bid of 8 cents. If an investor purchases shares of APA stock at the current price of $20.96 per share, then sells-to-open this call contract as a “covered call,” they would commit to selling the stock at $25.50. With the added premium from the sale, the total return (excluding any dividends) could reach 22.04% if the stock is called away at the April 11th expiration date (before considering broker commissions). However, if APA shares rise significantly, the investor may miss out on additional gains. Thus, examining APA’s trailing twelve-month trading history and understanding the fundamentals of the business is essential.

Below is a chart that displays APA’s trailing twelve-month trading history, with the $25.50 strike highlighted in red:

Investment Considerations and Odds

The $25.50 strike represents about a 22% premium over the current trading price of the stock, meaning it is out-of-the-money by that percentage. There is a possibility that the covered call contract may expire worthless, allowing the investor to retain both their shares and the collected premium. Current analytical data suggests that the odds of this occurring are 69%. The Stock Options Channel will continuously track these odds and publish a chart showing changes over time, along with the trading history of the option contract.

If the covered call contract does indeed expire worthless, the premium collected would provide a 0.38% boost to the investor’s return, which annualizes to 3.24%. This is referred to as the YieldBoost.

Volatility Analysis

The implied volatility for the above call contract example stands at 43%. Comparatively, the actual trailing twelve-month volatility—calculated from the last 250 trading days and today’s price of $20.96—is 37%. For additional put and call options contract ideas, visit StockOptionsChannel.com.

Top YieldBoost Calls of Stocks with Insider Buying »

For more insights, also see:

• AAN Next Dividend Date
• Institutional Holders of WDAY
• AAWW Videos

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.