December 2015 Options Now Available For PowerShares QQQ (QQQ)

Jan 15 2014, 11:30am CST | by

December 2015 Options Now Available For PowerShares QQQ (QQQ)

Investors in PowerShares QQQ (NASD: QQQ) saw new options become available today, for the December 2015 expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 702 days until expiration the newly available contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the QQQ options chain for the new December 2015 contracts and identified one put and one call contract of particular interest.

The put contract at the $83.00 strike price has a current bid of $7.37. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $83.00, but will also collect the premium, putting the cost basis of the shares at $75.63 (before broker commissions). To an investor already interested in purchasing shares of QQQ, that could represent an attractive alternative to paying $88.27/share today.

Because the $83.00 strike represents an approximate 6% 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 62%. 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 8.88% return on the cash commitment, or 4.62% 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 PowerShares QQQ, and highlighting in green where the $83.00 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $89.00 strike price has a current bid of $7.46. If an investor was to purchase shares of QQQ stock at the current price level of $88.27/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $89.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 9.28% if the stock gets called away at the December 2015 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if QQQ shares really soar, which is why looking at the trailing twelve month trading history for PowerShares QQQ, as well as studying the business fundamentals becomes important. Below is a chart showing QQQ’s trailing twelve month trading history, with the $89.00 strike highlighted in red:

Considering the fact that the $89.00 strike represents an approximate 1% 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 49%. 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 8.45% boost of extra return to the investor, or 4.39% 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 is 20%, while the implied volatility in the call contract example is 19%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today’s price of $88.27) to be 12%. 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

Real Gold IRA, LLC is Now Offering Nationwide Alternative to Retirement Account Holders - Learn How to Escape the High Fees That Erode IRA &amp; 401(k) Retirement Accounts
Real Gold IRA, LLC is now offering a nationwide alternative to retirement account holders. They specialize in converting high fee IRA/401(k) retirement accounts into IRA LLCs, saving people thousands in account management fees while allowing physical possession of precious metals. Real Gold IRA LLCs are the low cost retirement account.
 
 
Great Interviewing Tips to Make a Killer Sales Hire
Great Interviewing Tips to Make a Killer Sales Hire
Running a recruitment company, I’m often asked by business development professionals as to my thoughts on interviewing for a sales, sales management, or account management job. Frequently, I get variations on three of...
 
 
Online Scams Lure Shoppers With 'Luxury' Handbag Ripoffs
Online Scams Lure Shoppers With 'Luxury' Handbag Ripoffs
If you’re feeling flush and want to do your part for consumer confidence – say because you’re expecting a tax refund from Uncle Sam – shop carefully before blowing your wad on a luxury handbag, especially when buying...
 
 
The Art Of Essentialism
When I was at SXSW I learned about a discipline from author Greg McKeown called Essentialism. Essentialism is the art of discerning between external noise and internal voice. It’s not a task and time management tactical...
 
 
 

Latest from the Network

New iPhone Mockups Being Shown Off At Hong Kong Electronics Fair
There have been several leaks in recent months related to what the iPhone 6 is going to look like and when it will be released. For the first time, people are getting a chance to look at a physical version based on...
Read more on Apple Balla
 
iPhone Case Design Confirms Several Rumors About iPhone 6
iPhone cases are a big business and are typically ahead of the curve, basing their designs on new iPhone models before the announcements are even officially made. That is why the alleged photos of a new iPhone case are...
Read more on Apple Balla
 
Real Gold IRA, LLC is Now Offering Nationwide Alternative to Retirement Account Holders - Learn How to Escape the High Fees That Erode IRA & 401(k) Retirement Accounts
Provo, UT, April 17, 2014 --(PR.com)-- A median-income, two-earner household will pay nearly $155,000 on a variety of fees associated with their individual retirement savings accounts over the course of their lifetime...
Read more on Business Balla
 
Great Interviewing Tips to Make a Killer Sales Hire
Running a recruitment company, I’m often asked by business development professionals as to my thoughts on interviewing for a sales, sales management, or account management job. Frequently, I get variations on three of...
Read more on Business Balla
 
Online Scams Lure Shoppers With 'Luxury' Handbag Ripoffs
If you’re feeling flush and want to do your part for consumer confidence – say because you’re expecting a tax refund from Uncle Sam – shop carefully before blowing your wad on a luxury handbag, especially when buying...
Read more on Business Balla
 
The Art Of Essentialism
When I was at SXSW I learned about a discipline from author Greg McKeown called Essentialism. Essentialism is the art of discerning between external noise and internal voice. It’s not a task and time management tactical...
Read more on Business Balla
 
5 Startup Tips From Jennie Enterprise, CEO And Founder, CORE
I had the pleasure of sitting down with the charming, elegant and insanely driven Jennie Enterprise, founder and CEO of the ultra-exclusive CORE: club in mid-town Manhattan. Home to an array of personalities from...
Read more on Business Balla
 
How Learning An Additional Language Could Influence Your Business
I’ve written extensively about the ways good grammar and command of the English language can make or break a business (or a career). But what about your ability to speak another language, in addition to English? Is it...
Read more on Auto Balla
 
Dodilio's Unique Research Procurement System Adds Efficiency to Fortune 100 Company
Boston, MA, April 17, 2014 --(PR.com)-- Dodilio, the first global network to allow professionals to generate, consume, and collaboratively-develop customized research products and services on demand, resourced 12...
Read more on Business Balla
 
Hyster Company Works with Seegrid to Provide Guided by Seegrid Technology to Hyster Customers
Pittsburgh, PA, April 17, 2014 --(PR.com)-- Today, Hyster Company announced that by working with Seegrid, the leading provider of vision-guided flexible automated guided vehicles (AGVs), Guided by Seegrid technology...
Read more on Business Balla
 
 
Auto Balla Sexy Balla Sport Balla TV Balla Politics Balla Movie Balla Apple Balla Business Balla Ad Balla Celebrity Balla