Today, investors witnessed the commencement of trading in new options for the April 19th expiration of McKesson Corp (Symbol: MCK). At Stock Options Channel, the YieldBoost formula has scrutinized the MCK options chain for these new April 19th contracts and singled out one put and one call contract of specific interest.

Exploring Put Options

The put contract at the $500.00 strike price currently has a bid of $9.40. If an investor chooses to sell-to-open that put contract, they are committing to purchase the stock at $500.00. However, they will also collect the premium, thereby setting the cost basis of the shares at $490.60 (before broker commissions). This might present an appealing alternative for an investor already eyeing shares of MCK, potentially outmaneuvering the current share price of $504.79.

Given that the $500.00 strike represents an approximate 1% discount to the current trading price of the stock (essentially out-of-the-money by that percentage), there is a 99% possibility that the put contract would expire worthless. Should this scenario unfold, the premium would represent a 1.88% return on the cash commitment, or 10.73% annualized — termed the YieldBoost at Stock Options Channel.

Examining the Call Options

Turning to the calls side of the option chain, the call contract at the $510.00 strike price currently has a bid of $13.50. If an investor opts to purchase shares of MCK stock at the current price level of $504.79/share and subsequently sells-to-open that call contract as a “covered call,” they are committing to sell the stock at $510.00. This would drive a total return of 3.71% if the stock gets called away at the April 19th expiration (before broker commissions), excluding any dividends.

Considering that the $510.00 strike represents an approximate 1% premium to the current trading price of the stock (making it out-of-the-money by that percentage), there is a 99% possibility that the covered call contract would expire worthless, leaving the investor with both their shares of stock and the premium collected. The premium would then represent a 2.67% boost of additional return to the investor, or 15.26% annualized, known as the YieldBoost.

Furthermore, the actual trailing twelve-month volatility is calculated to be 20%. For more put and call options contract ideas, visit StockOptionsChannel.com.