Today, new options commenced trading for the April 19th expiration, capturing the interest of investors in Capital One Financial Corp (Symbol: COF). Stock Options Channel’s YieldBoost formula has delved into the COF options chain for the new April 19th contracts, uncovering one put and one call contract of particular intrigue.
Analyze the Put Contract
The put contract at the $135.00 strike price is currently bidding at $4.50. Selling this put contract commits the investor to buy the stock at $135.00 while collecting the premium, thereby setting the cost basis of the shares at $130.50 (before broker commissions). For an investor considering purchasing COF shares, this could be a compelling alternative to paying $136.64/share today.
The $135.00 strike, representing an approximate 1% discount to the current trading price of the stock, also bears the possibility of the put contract expiring worthless with current odds of 99%. Stock Options Channel will monitor these odds and publish a chart of the numbers over time, alongside the potential 3.33% return on the cash commitment, or 19.02% annualized — referred to as the ‘YieldBoost’.
Assess the Call Contract
The call contract at the $140.00 strike price is currently bidding at $4.90. If an investor were to sell-to-open that call contract as a “covered call,” they would commit to selling the stock at $140.00 after purchasing shares of COF stock at the current price level of $136.64/share. This commitment could drive a total return (excluding dividends, if any) of 6.05% if the stock gets called away at the April 19th expiration (before broker commissions).
The $140.00 strike, representing an approximate 2% premium to the current trading price of the stock, also carries the possibility of the covered call contract expiring worthless with current odds at 54%. In this scenario, the investor would retain both their shares of stock and the premium collected, which represents a 3.59% boost of extra return, or 20.47% annualized — known as the ‘YieldBoost’.
Volatility Insights
The implied volatility in the call contract example is 31%. Meanwhile, the actual trailing twelve-month volatility stands at 29%. For more put and call options contract ideas, investors are encouraged to visit StockOptionsChannel.com.
Also see:
EWZS market cap history
FPAY shares outstanding history
SCOR Insider Buying
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
