Mr. Cooper Group Inc. Options Trading Offers Potential Higher Returns

Investors in Mr Cooper Group Inc (Symbol: COOP) recently saw new options begin trading this week, aimed at July 2025 expiration dates. With 234 days remaining until expiration, these newly available contracts could provide sellers of puts or calls an opportunity for higher premiums than those available for contracts with shorter durations.

At Stock Options Channel, our YieldBoost formula has examined the COOP options chain and highlighted one put and one call contract that stand out.

The put contract at the $95.00 strike price currently has a bid of $4.30. By selling that put, an investor agrees to purchase the stock at $95.00 while also collecting the premium. This reduces the effective cost basis of the shares to $90.70 (before broker commissions). For those already interested in COOP, this option may prove to be a more appealing choice compared to paying $98.52 per share today.

The $95.00 strike price is about a 4% discount from the current stock price, indicating it is out-of-the-money by the same percentage. Data analysis indicates there is a 66% chance that the put contract will expire worthless. Stock Options Channel will monitor these odds over time, providing updates on their website. If the contract does expire worthless, the premium would yield a 4.53% return on cash commitment, or 7.06% annualized — a scenario we refer to as the YieldBoost.

Below is a chart displaying the last twelve months of trading history for Mr Cooper Group Inc, with the $95.00 strike marked in green:

On the call side, the contract at a $105.00 strike price features a current bid of $6.20. If an investor buys shares of COOP at the current price of $98.52 and sells a covered call, they would commit to sell the stock at $105.00. Including the premium received, this strategy could potentially yield a total return of 12.87% at expiration (before broker commissions), assuming the stock is called away. However, if COOP shares rise significantly, the investor might miss out on further gains. Analyzing COOP’s trading history and fundamental performance is crucial in this scenario. Below is a chart showing the past year of trading for COOP, with the $105.00 strike highlighted in red:

Since the $105.00 strike price represents about a 7% premium over the current trading price, there is a chance that the covered call may expire worthless. If that happens, the investor keeps both their shares and the collected premium. Current analysis suggests a 50% probability of this outcome. Regular updates about these odds will be available on Stock Options Channel’s website. If the call contract does expire worthless, the premium would provide a 6.29% increase in return for the investor, or 9.82% when annualized, another case of our YieldBoost.

Implied volatility for both the put and call contract options is about 30%. In contrast, we calculate the past year’s actual volatility, based on the closing values of the last 252 trading days alongside today’s price of $98.52, to be 27%. To explore further options ideas, visit StockOptionsChannel.com.

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