Investors in Dell Technologies Inc (Symbol: DELL) have confirmed that a new option, which expires March 24, began trading today. On the Stock Options Channel, the YieldBoost formula reports that for his new March 24th contract, he went through the DELL options chain and identified his 1 put and his 1 call contracts of particular interest.
The current bid for the put contract with a strike price of $41.00 is $1.13. If the investor sells the put contract, he commits to buy the stock for $41.00, but also recovers the premium, making the stock’s cost basis he $39.87 (before brokerage fees). For investors who are already interested in buying DELL shares, this could be a more attractive alternative than he is currently paying $42.52 per share.
A strike of $41.00 represents a discount of about 4% to the current trading price of the stock (that is, out of the money by that percentage), so it is also possible that the put contract expires worthless. Current analytical data (including Greek and implied Greek) currently suggests a 99% chance. The Stock Options Channel tracks these odds over time to see how they change and publishes charts of these numbers on its website under the contract details page for this contract. increase.If the contract expires at no value, the premium would be a 2.76% return on the cash commitment, or 20.14% annualized — the stock option channel allows this to be yield boost.
Below is a chart showing Dell Technologies Inc’s trading history over the last 12 months, highlighted in green where the $41.00 strike is for that history.
Looking at the call side of the options chain, the current bid for the call contract with a $43.00 strike is $1.66. If an investor buys his DELL stock at his $42.52/share, the current price level, and opens the call contract as a “covered call,” the investor buys the stock at his $43.00/share. We promise to sell. Considering that the call seller also recovers the premium, if the stock were called on his March 24th maturity (before brokerage fees), it would have resulted in a total return of 5.03% (excluding dividends, if any). increase. Of course, if Dell’s stock price surges, it could leave a lot of upside. That’s why it’s important to study the business fundamentals by looking at Dell Technologies Inc’s trading history over the past 12 months. Below is a chart showing DELL’s trading history over the past 12 months, with the $43.00 strike highlighted in red.
Considering the fact that the $43.00 strike represents a premium of about 1% to the current stock trading price (i.e. is out of the money by that percentage), if the covered call contract is then an investment The house will remain with its stock and premium collected. Current analytical data (including Greeks and implied Greeks) currently suggests that chance is 99% for him. On our website under the contract details page for this contract, the Stock Options Channel tracks these odds over time to see how the odds change and chart those numbers. Publish (the trading history of the options contract is also charted). If the covered call contract expires at no value, the premium represents his 3.90% increase in additional return to the investor, or his 28.52% annualized. yield boost.
On the other hand, we calculate the actual volatility over the last 12 months (taking into account the closing prices of the last 251 trading days and today’s price of $42.52) to be 43%. Visit StockOptionsChannel.com for more interesting put and call option contract ideas.
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The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.
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