HomeMarket NewsExploring Highwoods Properties: November 15th Options Unveiled

Exploring Highwoods Properties: November 15th Options Unveiled

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Unveiling Opportunities

Investors looking at Highwoods Properties, Inc. (Symbol: HIW) witnessed the introduction of fresh options for the November 15th expiration. The element that heavily influences the willingness of option buyers to pay is the time value. Hence, with 246 days until expiry, the newly accessible contracts offer a potential avenue for put or call sellers to secure a higher premium compared to nearer expiration contracts. At Stock Options Channel, our YieldBoost trick has meticulously scanned the HIW options chain for the new November 15th contracts and pinpointed a put and call contract worth a closer look.

Seizing the Moment

The put contract, stationed at the $12.50 strike price, currently holds a bid of 5 cents. By opting to sell-to-open this put contract, investors signal their readiness to acquire the stock at $12.50, while also earning the premium. This effectively sets the cost basis of the shares at $12.45 (prior to broker commissions). For an investor eyeing HIW shares, this could serve as a compelling alternative to shelling out $24.10/share today.

Analyzing Odds and Returns

Given that the $12.50 strike marks a nearly 48% markdown from the present trading price of the stock (placing it out-of-the-money by that percentage), there is a chance that the put contract might expire worthless. Current analytical data, inclusive of greeks and implied greeks, implies an 87% chance of this occurrence. Stock Options Channel will keep tabs on these odds to gauge shifts over time, subsequently posting a chart of the numbers on our website for this contract’s detail page. In the event of a worthless expiration, the premium would yield a 0.40% return on the cash commitment, or 0.59% annualized – what we at Stock Options Channel call the YieldBoost.

Visualizing the Scenario

A look at the trailing twelve-month trading background for Highwoods Properties, Inc. showcases the $12.50 strike’s position concerning that history. Moving on to the calls side of the option chain, the call contract at the $25.00 strike price possesses a current bid of 50 cents. For an investor procuring shares of HIW stock at the present $24.10/share level and opting to sell-to-open that call contract as a β€œcovered call,” they agree to offload the stock at $25.00. With the call seller also pocketing the premium, this could lead to a total return (excluding dividends) of 5.81% if the stock gets called away at the November 15th expiration (pre-broker commissions).

Considering Risks and Rewards

The $25.00 strike constitutes an approximately 4% premium to the current trading price of the stock (indicating it is out-of-the-money by that percentage), which implies a possibility that the covered call contract may expire worthless. The current data suggest a 49% chance of this outcome. Stock Options Channel will monitor these odds to observe changes over time, also charting the option contract’s trading history. Should the covered call contract expire worthless, the premium would translate to a 2.07% additional return or 3.08% annualized, dubbed the YieldBoost.

The mentioned put contract example boasts an implied volatility of 123%, whereas the call contract example displays 43% implied volatility.

The actual trailing twelve-month volatility, factoring in the most recent 251 trading day closing figures along with today’s price of $24.10, stands at 39%. For further insights into put and call options contracts worth exploring, check out StockOptionsChannel.com.

nslideshowTop YieldBoost Calls of the REITs Β»

Further Reading:

Β• STBX Videos
Β• Top Ten Hedge Funds Holding ET
Β• Freeport-McMoran Copper and Gold shares outstanding history

Kindly note that the views and opinions expressed here are those of the author and might not necessarily align with those of Nasdaq, Inc.

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