360° Coverage : October 18th Options Now Available For Allstate (ALL)

1 Updates
October 18th Options Now Available For Allstate (ALL)
Photo Credit: Forbes Business

October 18th Options Now Available For Allstate (ALL)

Feb 24 2014, 10:49am CST | by

Investors in Allstate Corp. (NYSE: ALL) saw new options become available today, for the October 18th expiration. One of the key data points that goes into the price an option buyer is willing to pay...

Filed under: news

 
 
 

35 weeks ago

October 18th Options Now Available For Allstate (ALL)

Feb 24 2014, 10:49am CST | by

Investors in Allstate Corp. (NYSE: ALL) saw new options become available today, for the October 18th 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 236 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 ALL options chain for the new October 18th contracts and identified one put and one call contract of particular interest.

The put contract at the $52.50 strike price has a current bid of $2.75. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $52.50, but will also collect the premium, putting the cost basis of the shares at $49.75 (before broker commissions). To an investor already interested in purchasing shares of ALL, that could represent an attractive alternative to paying $54.20/share today.

Because the $52.50 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 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 5.24% return on the cash commitment, or 8.10% annualized — at Stock Options Channel we call this the YieldBoost.

Click here to find out the Top YieldBoost Puts of Stocks Conducting Buybacks »

Below is a chart showing the trailing twelve month trading history for Allstate Corp., and highlighting in green where the $52.50 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $55.00 strike price has a current bid of $2.22. If an investor was to purchase shares of ALL stock at the current price level of $54.20/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $55.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 5.57% if the stock gets called away at the October 18th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ALL shares really soar, which is why looking at the trailing twelve month trading history for Allstate Corp., as well as studying the business fundamentals becomes important. Below is a chart showing ALL’s trailing twelve month trading history, with the $55.00 strike highlighted in red:

Considering the fact that the $55.00 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 54%. 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 4.10% boost of extra return to the investor, or 6.34% annualized, which we refer to as the YieldBoost.

Click here to find out the Top YieldBoost Calls of Stocks Conducting Buybacks »

The implied volatility in the put contract example is 19%, while the implied volatility in the call contract example is 18%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today’s price of $54.20) to be 17%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

Source: Forbes Business

 
Update
1

8 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 20,000 b ...
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

Snoring masks don't kill sex life: Study
New York, Oct 28 (IANS) A common therapy to tackle obstructive sleep apnea (OSA) does not become a hindrance between the sheets, says a study, allaying fears of OSA patients who believe the therapy interferes with sex.
 
 
Advanced hearing aids distort music more
New York, Oct 28 (IANS) The more advanced an hearing aid is today, the worse experience it would offer to music lovers who use such aids, says a study.
 
 
Hair disorder could signal dental decay
Washington, Oct 28 (IANS) If you are experiencing hair fall problems, your teeth may require extra care as researchers have found that hair disorder could increase risk of dental decay.
 
 
Three Red Cross workers cleared of Ebola in New Zealand
Wellington, Oct 28 (IANS) Three New Zealand Red Cross healthcare workers have been cleared of possible Ebola infection after being put on "self-monitoring" since returning from working in Ebola-affected countries in West Africa, Health Minister Jonathan Coleman said Tuesday.
 
 
 

Latest from the Network

Snoring masks don't kill sex life: Study
New York, Oct 28 (IANS) A common therapy to tackle obstructive sleep apnea (OSA) does not become a hindrance between the sheets, says a study, allaying fears of OSA patients who believe the therapy interferes with sex...
Read more on Celebrity Balla
 
Nine alive buried in China landslide
Beijing, Oct 28 (IANS) Nine people were buried alive Tuesday by a rain-triggered landslide in southwest China's Yunnan province, authorities said. The disaster struck Xiaoxin village in Dongchuan district of...
Read more on Politics Balla
 
Skin allergy makes Fox miss 'Teenage...' premiere
Beijing, Oct 28 (IANS) Actress Megan Fox was forced to skip the premiere of her film "Teenage Mutant Ninja Turtles" here after she developed skin allergy. On Sunday morning, the actress joined producers for a press...
Read more on Celebrity Balla
 
Advanced hearing aids distort music more
New York, Oct 28 (IANS) The more advanced an hearing aid is today, the worse experience it would offer to music lovers who use such aids, says a study. Less sophisticated hearing aids might actually be more compatible...
Read more on Business Balla
 
Hair disorder could signal dental decay
Washington, Oct 28 (IANS) If you are experiencing hair fall problems, your teeth may require extra care as researchers have found that hair disorder could increase risk of dental decay. Keratins, proteins associated...
Read more on Business Balla
 
Three Red Cross workers cleared of Ebola in New Zealand
Wellington, Oct 28 (IANS) Three New Zealand Red Cross healthcare workers have been cleared of possible Ebola infection after being put on "self-monitoring" since returning from working in Ebola-affected countries in...
Read more on Business Balla
 
Hugh Jackman has third session of skin cancer treatment
Los Angeles, Oct 28 (IANS) Actor Hugh Jackman has been treated for his third basal cell carcinoma in 12 months. The actor had a basal cell carcinoma removed in November 2013 as well as in May this year. The actor's...
Read more on Celebrity Balla
 
MIT survey reveals sexual assault on campus
New York, Oct 28 (IANS) Nearly 17 percent of female and five percent of male undergraduate students at the Massachusetts Institute of Technology (MIT) have revealed that they were sexually assaulted on the campus, said...
Read more on Politics Balla
 
Flashlight apps stealing your data?
New York, Oct 28 (IANS) Do you use a flashlight app on your smartphone? Security experts warn that free flashlight apps are secretly recording sensitive information from your phone. According to a US-based security...
Read more on Politics Balla
 
People flee as lava reaches Hawaiian village
Honolulu, Oct 28 (IANS) Many residents of a Hawaiian village have fled their homes, threatended by the flow of lava from Kilauea Volcano, a media report said Tuesday. People at Pahoa are running away as the lava from...
Read more on Politics Balla