New Horizons: Entering the Options Arena
Investors eyeing Antero Midstream Corp (Symbol: AM) witnessed the commencement of new options this week, set to expire on May 17th. At Stock Options Channel, our YieldBoost formula scrutinized the AM options chain, singling out one put and one call contract that piqued interest.
Examining Put Contracts: A Calculated Risk
A put contract at the $14.00 strike price beckons with a current bid of 35 cents. Selling-to-open this put commits investors to buy the stock at $14.00, cushioned by collecting the premium, thereby pegging the cost basis of the shares at $13.65, before broker commissions. This alternative offers a 1% discount to the current trading price, painting a 55% probability of expiring worthless. The premium could yield a return of 2.50% on the cash commitment, delighting those who traverse the path.
Graphical Insights: Tracing Stock History
An illustrative chart unveils the year-long trading trajectory of Antero Midstream Corp, spotlighting the $14.00 strike relative to its history, offering a visual compass for investors delving into the options realm.
Exploring Call Contracts: Unleashing Potential
On the calls side, a call contract at the $15.00 strike boasts a bid of 10 cents. An investor purchasing AM shares at $14.08 and selling-to-open this call as a ‘covered call’ agrees to part with the stock at $15.00. This maneuver could yield a return of 7.24% if the stock gets called away at expiration. Lingering potential profits beckon caution, prompting a scrutinization of AM’s trading history and fundamental bedrock. Visual representation in a chart adds a layer of understanding as the $15.00 strike gleams ominously in red.
Intricacies of Covered Calls: Balancing Risk
A 7% premium to the trading price unfurls possibilities, with a 61% chance of the contract expiring worthless. The intricate dance of risk and reward offers a 0.71% boost in case of a flop, a key metric we term as the ‘YieldBoost’.
Volatility: A Measure of Uncertainty
Implied volatility stands at 26% for put contracts and 22% for call contracts. Meanwhile, actual trailing twelve-month volatility paints a picture of 22%, allowing investors to gauge the ebbs and flows of the trading landscape.
For comprehensive insights into put and call options, StockOptionsChannel.com serves as a beacon for savvy investors navigating the choppy waters of the stock market.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
