Alcoa Investors Eye New April Options for Financial Opportunities

Investors in Alcoa Corporation (Symbol: AA) encountered new options available today, with an expiration date set for April 25th. At Stock Options Channel, our YieldBoost formula analyzed the AA options chain and highlighted one put and one call contract of particular interest.

Put Options: A Potentially Attractive Strategy

The put contract at the $33.00 strike price currently has a bid of 32 cents. Selling-to-open this put contract means investors commit to purchasing AA stock at $33.00 while collecting the premium, effectively reducing their cost basis to $32.68 (before broker commissions). This strategy offers an appealing alternative for those considering buying shares at $33.34 today.

The $33.00 strike price represents roughly a 1% discount to the current trading price of the stock, indicating it is out-of-the-money by that percentage. Current analytical data suggests there is a 57% probability that the put contract could expire worthless. Stock Options Channel will monitor these odds over time and publish updates on our website under the contract detail page. Should the put contract expire worthless, the premium translates to a 0.97% return on the cash commitment, or an annualized return of 7.08%, which we refer to as the YieldBoost.

Overview of Recent Trading History

Below is a chart displaying the trailing twelve months of trading history for Alcoa Corporation, with the $33.00 strike highlighted in green:

Call Options: Evaluating Covered Call Strategies

Turning to the call options, a contract at the $34.00 strike price has a current bid of 62 cents. Investors who purchase AA stock at the current price of $33.34/share and then sell-to-open this call contract as a “covered call” commit to selling the stock at $34.00. When factoring in the premium collected, this strategy could yield a total return of 3.84% if the stock is called away at the April 25th expiration (before broker commissions).

However, investors should note that significant upside potential could remain if AA shares rise sharply. Thus, it’s vital to consider the trailing twelve-month trading history and the company’s fundamentals. The following chart illustrates AA’s trading history, with the $34.00 strike highlighted in red:

Given that the $34.00 strike price represents about a 2% premium on the current trading price, there is also a chance that the covered call may expire worthless. In such a scenario, investors would retain their shares along with the premium collected. Current data suggests the odds of this happening are 50%. Our website will track these odds over time and provide updates on the trading history of this option contract. Should the call contract expire worthless, the premium could contribute an additional return of 1.86%, or an annualized 13.59%, which we also classify as a YieldBoost.

Volatility Insights

The implied volatility for both the put and call contracts stands at approximately 49%. Meanwhile, we calculate the actual trailing twelve months volatility—accounting for the last 250 trading day closing values alongside today’s price of $33.34—to be 46%. For more ideas on put and call options contracts worth researching, 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.