February 2014 Options Now Available For KeyCorp (KEY)

Dec 23 2013, 1:42pm CST | by

February 2014 Options Now Available For KeyCorp (KEY)
Photo Credit: Forbes Business

Investors in KeyCorp (NYSE: KEY) saw new options become available today, for the February 2014 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the KEY options chain for the new February 2014 contracts and identified one put and one call contract of particular interest.

The put contract at the $13.00 strike price has a current bid of 32 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $13.00, but will also collect the premium, putting the cost basis of the shares at $12.68 (before broker commissions). To an investor already interested in purchasing shares of KEY, that could represent an attractive alternative to paying $13.37/share today.

Because the $13.00 strike represents an approximate 3% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 63%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 2.46% return on the cash commitment, or 14.73% annualized — at Stock Options Channel we call this the YieldBoost.

Click here to find out the Top YieldBoost Puts of the S&P 500 »

Below is a chart showing the trailing twelve month trading history for KeyCorp, and highlighting in green where the $13.00 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $14.00 strike price has a current bid of 24 cents. If an investor was to purchase shares of KEY stock at the current price level of $13.37/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $14.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.51% if the stock gets called away at the February 2014 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if KEY shares really soar, which is why looking at the trailing twelve month trading history for KeyCorp, as well as studying the business fundamentals becomes important. Below is a chart showing KEY’s trailing twelve month trading history, with the $14.00 strike highlighted in red:

Considering the fact that the $14.00 strike represents an approximate 5% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 68%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.80% boost of extra return to the investor, or 10.74% annualized, which we refer to as the YieldBoost.

Click here to find out the Top YieldBoost Calls of the S&P 500 »

The implied volatility in the put contract example, as well as the call contract example, are both approximately 23%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today’s price of $13.37) to be 20%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Europe's Galileo satellites launched into wrong orbit
Paris, Aug 23 (IANS) European satellite launch company Arianespace announced Saturday that the two satellites of Europe's Galileo satellite navigation system launched Friday from the European spaceport in French Guiana were delivered into the wrong orbit.
 
 
UN to radically scale up fight against Ebola
Monrovia, Aug 23 (IANS/WAM) The UN has vowed to radically scale up support to fight the Ebola virus outbreak in West Africa and said more health workers will be brought to Liberia to deal with the disease.
 
 
White dwarf stars formed mysterious supernova
London, Aug 23 (IANS) Supernova 2014J is 11 million light years away from earth and was only seen by chance at the University of London Observatory this year.
 
 
Universe's earliest stars were monstrous: Study
Tokyo, Aug 23 (IANS) Little is known about the universe's earliest stars but if we believe astronomers, they might have been hundreds of times more massive than the sun.
 
 
 

Latest from the Network

Force India struggle in wet Belgian GP qualifying
Spa-Francorchamps (Belgium), Aug 23 (IANS) Force India drivers Sergio Perez and Nico Hulkenberg had a difficult outing in the Belgian Grand Prix qualifying Saturday and will start Sunday's race 13th and 18th....
Read more on Sport Balla
 
Simon Pegg finds watching himself hard
Simon Pegg sometimes finds it ''hard'' to watch his own movies. The 44-year-old actor - who has five-year-old daughter Matilda with wife Maureen - is very ''proud'' of his work but doesn't enjoying viewing them back as...
Read more on Movie Balla
 
Indian cueists bag Asian title
Karachi, Aug 23 (IANS) India A, consisting of Kamal Chawla, Faisal Khan and Dharmender Lilly, won the Gold medal in the Asian Snooker Team championship here Saturday, defeating Pakistan A 3-1 in the final. The Indian...
Read more on Sport Balla
 
Sri Lanka, Pakistan 2nd ODI shifted to Hambantota
Colombo, Aug 23 (IANS) The second One-Day International (ODI) between Sri Lanka and Pakistan was Saturday moved up to Aug 26 and the venue shifted to Hambantota after heavy rainfall here left the Premadasa Stadium...
Read more on Sport Balla
 
Stacy Keibler gives birth to daughter
Los Angeles, Aug 23 (IANS) Former wrestler-turned-actress Stacy Keibler has welcomed a girl child. The 34-year-old and her husband, Jared Pobre, welcomed their daughter, Ava Grace Pobre, into the world Wednesday, she...
Read more on Celebrity Balla
 
Britain mulls steps to combat extremism
London, Aug 23 (IANS) To discourage extremist elements originating from Britain, Home Secretary Theresa May has plans to bring in new laws that may strip Britons fighting in Syria and Iraq of their citizenship. May is...
Read more on Politics Balla
 
Europe's Galileo satellites launched into wrong orbit
Paris, Aug 23 (IANS) European satellite launch company Arianespace announced Saturday that the two satellites of Europe's Galileo satellite navigation system launched Friday from the European spaceport in French Guiana...
Read more on Apple Balla
 
Indian man commits suicide in UAE
Dubai, Aug 23 (IANS) A 24-year-old Indian man was found dead Saturday at his home in the United Arab Emirates (UAE), a media report said. The man, identified by his initials R.M., committed suicide by hanging himself...
Read more on Politics Balla
 
Boy killed in Israeli airstrike on Gaza
Gaza, Aug 23 (IANS) An eight-year-old boy was killed and three others wounded in a fresh Israeli airstrike Saturday afternoon on a house in the central Gaza Strip, medics said. Ashraf al-Qedra, the health ministry...
Read more on Politics Balla
 
Toll in Japan mudslides hits 49
Tokyo, Aug 23 (IANS) The toll in deadly landslides in the Japanese city of Hiroshima rose to 49 Saturday, while 41 people remained missing. About 2,800 rescuers continued their efforts in searching for survivors three...
Read more on Politics Balla