Investors in Ford Motor Co. (Symbol: F) have a new opportunity to engage with put and call options, as contracts for the December 20th expiration have commenced trading. These new contracts, with 343 days until expiration, present a unique prospect for sellers of puts or calls to potentially secure higher premiums compared to contracts with nearer expirations. At Stock Options Channel, our YieldBoost formula has scoured the F options chain for the new December 20th contracts and identified an intriguing put and call contract.
Optimistic Put Option
The put contract at the $10.00 strike price is currently bid at 75 cents. By selling-to-open this put contract, an investor commits to purchase the stock at $10.00, effectively setting the cost basis of the shares at $9.25 (before broker commissions). For an investor interested in acquiring F shares, this conveys an appealing alternative to the current trading price of $11.59/share.
The $10.00 strike represents an approximately 14% discount to the current trading price of the stock, indicating the potential for the put contract to expire worthless. Analytical data currently suggests a 99% probability of this outcome. Stock Options Channel will monitor these odds over time and publish a chart on our website to track any changes, encapsulating the perceived potential in our YieldBoost metric.
Historical Context
Exploring the trailing twelve-month trading history for Ford Motor Co., the $10.00 strike is visibly positioned relative to this historical context, providing additional insight for potential decision-making.
Promising Call Option
On the calls side of the option chain, the call contract at the $12.00 strike price currently has a bid of $1.15. Tapping into this call contract as a “covered call” after purchasing shares at the current price level of $11.59/share, commits the investor to sell the stock at $12.00, resulting in a potential total return (excluding dividends, if any) of 13.46% if the stock is called away at the December 20th expiration (before broker commissions).
Of course, a lot of upside could potentially be left on the table if F shares really soar, which is why looking at the trailing twelve-month trading history for Ford Motor Co., as well as studying the business fundamentals becomes important.
Call Option Probabilities
The $12.00 strike represents an approximate 4% premium to the current trading price of the stock, and the current analytical data suggests a 99% probability of the covered call contract expiring worthless. This would result in the investor keeping both their shares of stock and the premium collected, translating to a 9.92% boost of extra return, or 10.56% annualized in terms of YieldBoost.
Volatility Considerations
Meanwhile, the actual trailing twelve-month volatility is calculated at 35%, which frames the broader context for understanding put and call options contract opportunities. To explore additional put and call options contract ideas, visit StockOptionsChannel.com.
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