360° Coverage : First Week of TTM February 22nd Options Trading

2 Updates
First Week of TTM February 22nd Options Trading

First Week of TTM February 22nd Options Trading

Jan 27 2014, 10:36am CST | by

Investors in Tata Motors Ltd (NYSE: TTM) saw new options become available this week, for the February 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the TTM...

Filed under: news

 
 
 

33 weeks ago

First Week of TTM February 22nd Options Trading

Jan 27 2014, 10:36am CST | by

Investors in Tata Motors Ltd (NYSE: TTM) saw new options become available this week, for the February 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the TTM options chain for the new February 22nd contracts and identified one put and one call contract of particular interest.

The put contract at the $27.00 strike price has a current bid of 95 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $27.00, but will also collect the premium, putting the cost basis of the shares at $26.05 (before broker commissions). To an investor already interested in purchasing shares of TTM, that could represent an attractive alternative to paying $27.38/share today.

Because the $27.00 strike represents an approximate 1% 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 57%. 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 3.52% return on the cash commitment, or 49.39% 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 Tata Motors Ltd, and highlighting in green where the $27.00 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $28.00 strike price has a current bid of 85 cents. If an investor was to purchase shares of TTM stock at the current price level of $27.38/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $28.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 5.37% if the stock gets called away at the February 22nd expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if TTM shares really soar, which is why looking at the trailing twelve month trading history for Tata Motors Ltd, as well as studying the business fundamentals becomes important. Below is a chart showing TTM’s trailing twelve month trading history, with the $28.00 strike highlighted in red:

Considering the fact that the $28.00 strike represents an approximate 2% 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 56%. 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 3.10% boost of extra return to the investor, or 43.58% 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 41%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today’s price of $27.38) to be 38%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

Source: Forbes Business

 
Update
2

2 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

2 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tr ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

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

Russia's Gazprom to sign gas supply contract with China
Moscow, Sep 18 (IANS) Russian energy giant Gazprom have planned to sign a 30-year gas supply contract with China via the western route, the company's CEO Alexei Miller said Wednesday.
 
 
East African countries vow to preven Ebola
Nairobi, Sep 18 (IANS) Ministers of health, transport and immigration from five eastern African countries Wednesday vowed to strengthen measures that would prevent spread of Ebola virus in the region.
 
 
World Bank warns Ebola's economic impact in West Africa
Washington, Sep 18 (IANS) The Ebola virus that has become rampant in West Africa will enormously hurt fragile economic growth of the three hard-hit nations of Guinea, Liberia, and Sierra Leone if it goes unchecked, the World Bank warned Wednesday.
 
 
34 kids died of contaminated measles vaccines: Syrian rebels
Damascus, Sep 17 (IANS) At least 34 children have died in rebel-held Syria after being injected with contaminated measles vaccines, the rebels have claimed.
 
 
 

Latest from the Network

Kylie Jenner wants to become a singer
Los Angeles, Sep 18 (IANS) Reality TV star Kylie Jenner reportedly wants to become a singer because she has "realised that she can't compete with" her older sister Kendall when it comes to modelling. The "Keeping Up...
Read more on Celebrity Balla
 
EU to help Croatia fight cybercrime
Zagreb, Sep 18 (IANS) The European Union (EU) will finance Croatia 700,000 euros ($904,715) for training police to fight against cybercrime, Croatia's interior ministry said Wednesday. The project is intended to...
Read more on Politics Balla
 
Turkey supports Macedonia's bid to join NATO
Ankara, Sep 18 (IANS) Turkey will continue to support Macedonia's aspiration to join NATO and the European Union (EU), Turkish Prime Minister Ahmet Davutoglu said Wednesday. "Turkey supports Macedonia for NATO...
Read more on Politics Balla
 
East African countries vow to preven Ebola
Nairobi, Sep 18 (IANS) Ministers of health, transport and immigration from five eastern African countries Wednesday vowed to strengthen measures that would prevent spread of Ebola virus in the region. The ministers...
Read more on Business Balla
 
World Bank warns Ebola's economic impact in West Africa
Washington, Sep 18 (IANS) The Ebola virus that has become rampant in West Africa will enormously hurt fragile economic growth of the three hard-hit nations of Guinea, Liberia, and Sierra Leone if it goes unchecked, the...
Read more on Business Balla
 
Avril Lavigne and Chad Kroeger to split?
Avril Lavigne and Chad Kroeger's marriage is allegedly on the rocks. The 29-year-old singer and the 39-year-old Nickelback frontman, who tied the knot at Château de La Napoule in the South of France 14-months ago, are...
Read more on Celebrity Balla
 
Benji Madden wants to be a father
Benji Madden wants to have children. The 35-year-old rocker, who has been dating Cameron Diaz since April, admits he is eager to become a father in the future. The Good Charlotte star told Details magazine that a family...
Read more on Celebrity Balla
 
George Clooney's future in-laws paying for wedding
George Clooney's fiancée's family are paying for their upcoming wedding. The 53-year-old actor, who has an estimated fortune of $180 million, reportedly isn't footing the bill for his lavish nuptials in Venice, Italy...
Read more on Celebrity Balla
 
Kendra Wilkinson has reconciled with Hank Basket
Kendra Wilkinson has let Hank Baskett move back into their Los Angeles mansion. The 'Kendra On Top' star, who previously admitted she felt like she ''was getting shot'' when she heard rumors her husband had cheated on...
Read more on Celebrity Balla
 
No ground troops against IS : Obama
Washington, Sep 18 (IANS) President Barack Obama Wednesday reiterated that the US will not use ground troops against Iraq to fight against the Islamic State (IS). "I will not commit you, and the rest of our Armed...
Read more on Politics Balla