New Options Available for American Water Works Investors

Investors in American Water Works Co, Inc. (Symbol: AWK) received news today regarding the introduction of new options, set to expire on December 19. With 249 days until expiration, these newly available contracts offer potential advantages for option sellers, particularly for puts and calls, to achieve higher premiums compared to contracts expiring sooner. According to the Stock Options Channel, our YieldBoost formula has analyzed the AWK options chain and identified one particular put and one call contract of interest.

Put Contract Insights

The put contract at the $145.00 strike price currently has a bid of $9.00. By selling this put, an investor agrees to purchase AWK shares at $145.00, while also collecting the premium, which effectively lowers the cost basis of the shares to $136.00 (excluding broker commissions). For those interested in buying AWK shares at the current price of $147.49, this could present an appealing opportunity.

This $145.00 strike represents an approximate 2% discount to the current trading price, making it out-of-the-money by that percentage. Current analytical data, including greeks and implied greeks, indicate a 60% chance that this put contract might expire worthless. The Stock Options Channel will track these odds over time and publish updates on our website, providing a chart that reflects these changes. If the contract does expire worthless, the premium would yield a 6.21% return on the cash commitment or 9.10% annualized—what we refer to as YieldBoost.

Call Contract Analysis

On the calls side, the contract with a $150.00 strike price is currently bid at $11.30. If an investor chooses to purchase AWK shares at $147.49 and simultaneously sells this call as a “covered call,” they commit to selling the stock at $150.00. Adding in the premium collected, this results in a total return (excluding any dividends) of 9.36% if the stock is called away by the December 19 expiration. However, if AWK’s shares rise significantly, the investor might miss out on substantial upside potential. Therefore, analyzing the trailing twelve-month trading history for American Water Works and its business fundamentals is crucial. The chart below highlights AWK’s trading history, with the $150.00 strike indicated in red:

The $150.00 strike is about 2% above the current trading price, also placing it out-of-the-money by that margin. This raises the possibility that the covered call contract could expire worthless, allowing the investor to retain both their shares and the collected premium. Current data suggest a 46% likelihood of this occurring. We will monitor these odds and present historical trading data on our website under the contract detail page for this option. Should the contract expire worthless, the premium would yield an additional 7.66% return or 11.23% annualized—again, referred to as YieldBoost.

Volatility Insights

For the put contract, the implied volatility stands at 27%, while for the call contract, it is slightly lower at 26%. In contrast, our calculations show that the actual trailing twelve-month volatility (based on the last 250 trading days and today’s price of $147.49) is approximately 23%. For additional ideas on put and call options contracts, visit StockOptionsChannel.com.

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also see:

• Airlines Dividend Stocks
• Funds Holding PCG
• KTB Options Chain

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