Today, options traders had their eyes trained on Service Corp. International (Symbol: SCI) as new options began trading for the April 19th expiration. Savvy investors are ever vigilant, and they won’t miss the opportunities this new expiry has to offer. At Stock Options Channel, the YieldBoost formula has unearthed a put and a call contract, both of which have piqued the interest of traders.
First on the radar is the put contract at the $70.00 strike price, currently bidding at $1.90. Should an investor choose to sell-to-open this put contract, they are signing up to acquire the stock at $70.00 but will also pocket the premium, reducing the cost basis of the shares to $68.10 (before broker commissions). For those eyeing SCI shares, this could be a tantalizing alternative to the present $70.44/share tag.
Given that the $70.00 strike reflects around a 1% discount to the current stock price (essentially, it’s out-of-the-money by that amount), there’s a chance the put contract could expire worthless. Current analytics, including greeks and implied greeks, suggest a 99% probability of this outcome. Stock Options Channel will monitor these odds over time, painting a clear picture of the contract’s fate. If it does expire fruitless, the premium would yield a 2.71% return on the cash commitment, or an annualized 15.49% – termed the YieldBoost by Stock Options Channel.
To visualize SCI’s recent trading history over the past twelve months, a chart has been curated to highlight the $70.00 strike’s location relative to that timeline.
Shifting focus to the call options, the $72.50 strike holds a current bid of $1.45. If an investor opts to purchase SCI shares at the prevailing price of $70.44/share and then execute a “covered call” by selling-to-open the call contract, they are obligating to sell the stock at $72.50. Factoring in the premium, this would yield a total return of 4.98% if the stock is called away at the April 19th expiration (before broker commissions). However, there’s also the chance of potentially missing out on further upside should SCI shares rally. To assess this, a glance at the trailing twelve-month trading history for Service Corp. International, as well as the business fundamentals, holds paramount importance. A chart depicting the same has been provided with the $72.50 strike highlighted in red.
Given that the $72.50 strike reflects an approximate 3% premium to the current trading price (in other words, it’s out-of-the-money by that percentage), there’s a possibility that the covered call contract could expire worthless. Current analytics point to a 99% likelihood of this outcome. Stock Options Channel will track these odds over time and publish a chart of those numbers, alongside the trading history of the option contract. In case the covered call contract ebbs into futility, the premium would represent a 2.06% extra return for the investor, or 11.75% on an annualized basis – dubbed as the YieldBoost by Stock Options Channel.
Calculating the trailing twelve-month volatility to be 24%, considering the last 251 trading days’ closing values alongside today’s price of $70.44, provides a broader perspective. Investors seeking further put and call options contract ideas are encouraged to explore StockOptionsChannel.com.
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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.
