Investors in Advance Auto Parts Inc (Symbol: AAP) saw new options open for trading today with a January 2023 maturity. On the Stock Options Channel, the YieldBoost formula examined his AAP options chain for his January 2023 new contract and identified his one put and his one call contract of particular interest.
The current bid for the put contract with a strike price of $150.00 is $5.60. If the investor sells and opens the put contract, he commits to buy the stock for $150.00, but also recovers the premium, and he sets the cost basis of the stock at $144.40 (before broker fees). For investors already interested in buying AAP shares, this could be a more attractive alternative than currently paying $151.00 per share.
A strike of $150.00 represents a discount of approximately 1% to the current stock trading price (ie, out of the money by that percentage), so it is also possible that the put contract will expire 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 3.73% return on cash commitments, or an annualized rate of 31.69% — Stock option channels allow this to be yield boost.
Below is a chart showing Advance Auto Parts Inc’s trading history over the last 12 months, highlighted in green where the $150.00 strike is for that history.
Looking at the call side of the options chain, the current bid for the call contract with a strike price of $155.00 is $3.60. If an investor buys his AAP shares at the current price level of $151.00/share and opens the call contract as a “covered call” sell toe, the investor must sell the shares at $155.00. I promise Considering that the seller of the call also recovers the premium, if the stock were called at his January 2023 maturity (before brokerage fees), that would be a total return of 5.03% (excluding dividends, if any). increase. Of course, if AAP’s stock price surges, it could leave a lot of upside. Therefore, it is important to study the trading history of Advance Auto Parts Inc in the last 12 months and study the fundamentals of the business. Below is a chart showing the AAP’s trading history over the past 12 months, with the $155.00 strike highlighted in red.
Considering the fact that the $155.00 strike represents about a 3% premium to the current stock trading price (i.e. it is out of the money by that percentage), if the covered call contract is then , the investor will leave his 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 2.38% increase in additional return to the investor, or his 20.24% 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 252 trading days and today’s price of $151.00) to be 38%. Visit StockOptionsChannel.com for more interesting put and call option contract ideas.
See also
• BDCs hedge funds sell
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• Fund holding AMU
The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.