New EOG Resources Options for December: A Closer Look at the Potential

Today, EOG Resources, Inc. (Symbol: EOG) has introduced new options with a December 6th expiration. Stock Options Channel’s YieldBoost analysis has highlighted one put and one call contract that may be of interest to investors.

Put Contract Insights

The put contract at the $122.00 strike price has a current bid of $2.15. If an investor decides to sell-to-open this put, they would agree to purchase the stock at $122.00 while earning the premium. This brings the effective cost of the shares down to $119.85 (before broker commissions). For those looking to purchase EOG shares, this strategy could be a better option than buying at the current market price of $124.17/share.

The $122.00 strike price is about a 2% discount to the stock’s current trading value, making it out-of-the-money by that percentage. According to current analytical data, there is a 59% chance the put option may expire worthless. Stock Options Channel will continue to follow these odds, providing updates on their website. If the put expires worthless, the premium earned would yield a return of 1.76% on the cash commitment, translating to an annualized return of 14.94%, referred to as the YieldBoost.

Examining EOG’s Trading History

Below is a chart showcasing the trailing twelve months of trading for EOG Resources, Inc., with the $122.00 strike marked:

Call Contract Overview

On the call side, the contract at the $125.00 strike price currently has a bid of $3.00. Should an investor opt to buy EOG stock at the current price of $124.17/share and then sell-to-open this call, they would commit to selling the stock at $125.00. With the additional premium collected, the total return (excluding potential dividends) could reach 3.08% if the stock is called away at the December 6th expiration (before broker commissions). However, if EOG shares rose significantly, the investor might miss out on higher gains. Thus, reviewing EOG’s past trading and its business fundamentals is essential.

The following chart displays EOG’s trading history over the past twelve months, with the $125.00 strike indicated:

Potential Outcomes from the Covered Call

The $125.00 strike price is roughly 1% higher than the current trading price, making it out-of-the-money by that same percentage. Therefore, the call option might also expire worthless, in which case the investor retains their shares alongside the premium received. Current analysis suggests that there’s a 50% chance of this happening. Stock Options Channel will also track these odds and display updates on their website.

If the covered call expires worthless, the earned premium would provide an additional 2.42% return to the investor, or an impressive annualized rate of 20.49%, again referred to as the YieldBoost.

Volatility Analysis

The implied volatility for the put contract stands at 28%, while for the call it is at 31%. We also calculate that the actual trailing twelve-month volatility is 22%, based on the last 251 trading days and the current price of $124.17. For more options contract ideas and insights, StockOptionsChannel.com offers additional resources.

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The views expressed in this article are those of the author and do not necessarily reflect the views of Nasdaq, Inc.