First Week of March 22nd Options Trading For Zoetis (ZTS)

Jan 27 2014, 10:37am CST | by

First Week of March 22nd Options Trading For Zoetis (ZTS)

Investors in Zoetis Inc (NYSE: ZTS) saw new options begin trading this week, for the March 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ZTS options chain for the new March 22nd contracts and identified one put and one call contract of particular interest.

The put contract at the $31.00 strike price has a current bid of 80 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $31.00, but will also collect the premium, putting the cost basis of the shares at $30.20 (before broker commissions). To an investor already interested in purchasing shares of ZTS, that could represent an attractive alternative to paying $31.43/share today.

Because the $31.00 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 58%. 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 2.58% return on the cash commitment, or 17.46% annualized — at Stock Options Channel we call this the YieldBoost.

Click here to find out the Top YieldBoost Puts of Stocks Analysts Like »

Below is a chart showing the trailing twelve month trading history for Zoetis Inc, and highlighting in green where the $31.00 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $32.00 strike price has a current bid of 70 cents. If an investor was to purchase shares of ZTS stock at the current price level of $31.43/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $32.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.04% if the stock gets called away at the March 22nd expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ZTS shares really soar, which is why looking at the trailing twelve month trading history for Zoetis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing ZTS’s trailing twelve month trading history, with the $32.00 strike highlighted in red:

Considering the fact that the $32.00 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 57%. 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 2.23% boost of extra return to the investor, or 15.07% annualized, which we refer to as the YieldBoost.

Click here to find out the Top YieldBoost Calls of Stocks Analysts Like »

The implied volatility in the put contract example is 23%, while the implied volatility in the call contract example is 22%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 247 trading day closing values as well as today’s price of $31.43) to be 22%. 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

Indian American scientist develops path to brighter LCD displays
Washington, Nov 24 (IANS) Researchers led by an Indian-American have developed a polarising filter that can result in mobile device displays that last much longer on a single battery charge and cameras that can shoot in dim light.
 
 
Xi Jinping-Peng Liyuan love story goes viral on internet
Beijing, Nov 24 (IANS/EFE) A music video that tells the story of the deep love between Chinese President Xi Jinping and his wife Peng Liyuan has gone viral on the internet with more than 22 million views in a week, the People's Daily reported Monday.
 
 
Italian doctor contracts Ebola in Sierra Leone
Rome, Nov 24 (IANS) A doctor working for a voluntary organisation in Sierra Leone has become the first Italian to contract Ebola, media reported Monday.
 
 
Complete fossil of small dinosaur found
Seoul, Nov 24 (IANS/EFE) South Korean paleontologists have found a complete fossil of a small dinosaur in rare condition, the first such discovery of its kind in the country, according to the National Research Institute of Cultural Heritage in Seoul.
 
 
 

Latest from the Network

Turkey rejects easing relations with Egypt
Istanbul, Nov 24 (IANS) Turkish President Recep Tayyip Erdogan said Monday that he rejected the reconciliation efforts for friendly relations with Egypt. Turkey does not accept the legitimacy of Egyptian President...
Read more on Politics Balla
 
US defence chief Chuck Hagel forced out
Washington, Nov 24 (IANS) In a surprise development, US Defense Secretary Chuck Hagel resigned Monday reportedly under pressure amid criticism of President Barack Obama's national security team over how to deal with...
Read more on Politics Balla
 
Bette Midler slams 'silly' Ariana Grande
Bette Midler has slammed Ariana Grande's ''silly high voice''. The 68-year-old actress hit out at the 21-year-old star's sexy music videos for being ''silly beyond belief'', and insists the 'Bang Bang' hitmaker's...
Read more on Celebrity Balla
 
Demi Lovato: Me and Miley have nothing in common
Demi Lovato insists she and Miley Cyrus won't be friends again because they have nothing in common. The 22-year-old singers were good pals during their rise to fame but the 'Heart Attack' hitmaker admits that while she...
Read more on Celebrity Balla
 
Indian American scientist develops path to brighter LCD displays
Washington, Nov 24 (IANS) Researchers led by an Indian-American have developed a polarising filter that can result in mobile device displays that last much longer on a single battery charge and cameras that can shoot...
Read more on Politics Balla
 
Kohl's Black Friday Sale launched Online
The Kohl's Black Friday 2014 sale starts at 6pm on Thanksgiving Day in stores, but has launched now on kohls.com. Kohl's offers again the popular $15 Kohl's Cash on every $50 spent in this year's Black Friday sale. This...
Read more on Black Friday Countdown
 
Brenton Thwaites for Pirates of the Caribbean: Dead Men Tell No Tales
Brenton Thwaites will star in 'Pirates of the Caribbean: Dead Men Tell No Tales'. The star will play the role of British soldier Henry, beating fellow actors such as Ansel Elgort of 'The Fault In Our Stars' and George...
Read more on Movie Balla
 
Josh Hutcherson 'moves on' from young adult movies
Josh Hutcherson wants to ''move on'' from young adult films like 'The Hunger Games'. The 22-year-old actor - who has starred in four films based on the dystopian 'Hunger Games' novels since 2011 - plans to explore other...
Read more on Movie Balla
 
33 IS militants killed in Iraq's Mosul, two towns retaken (Roundup)
Baghadad, Nov 24 (IANS) At least 33 militants of the Islamic State (IS) died Monday in the Iraqi city of Mosul and the surrounding area, including a leader who was responsible for the sale of kidnapped Yazidi women,...
Read more on Politics Balla
 
Jailbreak in Argentina, 32 inmates escape
Buenos Aires, Nov 24 (IANS/EFE) Thirty-two inmates escaped over the weekend from a police jail in Rosario, a city in central Argentina, police said Monday. The inmates broke out of the jail Sunday by threatening the...
Read more on Politics Balla