360° Coverage : First Week of ROST November 22nd Options Trading

2 Updates
First Week of ROST November 22nd Options Trading
Photo Credit: Forbes Business

First Week of ROST November 22nd Options Trading

Mar 26 2014, 12:30pm CDT | by

Investors in Ross Stores, Inc. (NASD: ROST) saw new options become available this week, for the November 22nd expiration. One of the key inputs that goes into the price an option buyer is willing to...

Filed under: news

 
 
 

26 weeks ago

First Week of ROST November 22nd Options Trading

Mar 26 2014, 12:30pm CDT | by

Investors in Ross Stores, Inc. (NASD: ROST) saw new options become available this week, for the November 22nd expiration. One of the key inputs that goes into the price an option buyer is willing to pay, is the time value, so with 241 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 ROST options chain for the new November 22nd contracts and identified one put and one call contract of particular interest.

The put contract at the $67.50 strike price has a current bid of $3.40. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $67.50, but will also collect the premium, putting the cost basis of the shares at $64.10 (before broker commissions). To an investor already interested in purchasing shares of ROST, that could represent an attractive alternative to paying $71.67/share today.

Because the $67.50 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 65%. 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 5.04% return on the cash commitment, or 7.63% annualized — at Stock Options Channel we call this the YieldBoost.

Click here to find out the Top YieldBoost Puts of the Nasdaq 100 »

Below is a chart showing the trailing twelve month trading history for Ross Stores, Inc., and highlighting in green where the $67.50 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $72.50 strike price has a current bid of $4.60. If an investor was to purchase shares of ROST stock at the current price level of $71.67/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $72.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 7.58% if the stock gets called away at the November 22nd expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if ROST shares really soar, which is why looking at the trailing twelve month trading history for Ross Stores, Inc., as well as studying the business fundamentals becomes important. Below is a chart showing ROST’s trailing twelve month trading history, with the $72.50 strike highlighted in red:

Considering the fact that the $72.50 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 50%. 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 6.42% boost of extra return to the investor, or 9.72% annualized, which we refer to as the YieldBoost.

Click here to find out the Top YieldBoost Calls of the Nasdaq 100 »

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 252 trading day closing values as well as today’s price of $71.67) to be 19%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

Source: Forbes Business

 
Update
2

4 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, ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

4 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 ...
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

China warns of dengue risk during National Day holidays
Beijing, Sep 29 (IANS) The Chinese Center for Disease Control and Prevention (CDC) Monday warned public to stay alert about dengue exposure during the week-long National Day holiday beginning Oct 1.
 
 
Play after school makes the minds of kids sharper
New York, Sep 29 (IANS) If your child cannot wait to play after school, better not to restrict him, a study suggests.
 
 
OPEC daily basket price closes lower
Vienna, Sep 29 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $94.13 a barrel Friday, compared to $94.25 a barrel last Thursday, the OPEC Secretariat said.
 
 
Scorpion venom to fight brain cancer
Washington, Sep 29 (IANS) Scientists have received approval from the US Food and Drug Administration (FDA) to use "Tumour Paint", a product derived from scorpion venom for study in human trials in the US, in an effort to treat people suffering from brain cancer.
 
 
 

Latest from the Network

Black Friday Schedule 2014 Released
Black Friday 2014 is in 60 days, but the first Black Friday sales will already start in 1 month. Over the last couple of years, Black Friday has become a month-long sales event with multiple special events. I4U News has...
Read more on Black Friday Countdown
 
Asian Games: Discus thrower Seema Punia wins gold
Incheon, Sep 29 (IANS) India's discus thrower Seema Punia won the gold medal while her compatriot Krishna Poonia finished fourth in the 17th Asian Games at the Incheon Asiad Main Stadium here Monday. Chinese Xiaoxin...
Read more on Sport Balla
 
Brad Pitt believes in institution of marriage
Los Angeles, Sep 29 (IANS) Actor Brad Pitt, who exchanged vows with his long-term partner and actress Angelina Jolie in August, says marriage is more than just a title. The 50-year-old actor shared his views on...
Read more on Celebrity Balla
 
Clooney, Alamuddin to make things official Monday
Rome, Sep 29 (IANS) Newly married couple George Clooney and British human rights lawyer Amal Alamuddin will officialise their marriage in Venice today. The couple, who wed Saturday at a private star-studded ceremony,...
Read more on Celebrity Balla
 
China warns of dengue risk during National Day holidays
Beijing, Sep 29 (IANS) The Chinese Center for Disease Control and Prevention (CDC) Monday warned public to stay alert about dengue exposure during the week-long National Day holiday beginning Oct 1. A total of 12,...
Read more on Business Balla
 
Robot to figure out if Thai cuisine is genuine or not
Bangkok, Sep 29 (IANS) The Thai government is set to unveil a robotic taster that will determine if the food you have ordered anywhere in the world at a Thai restaurant is genuine or not. The "e-delicious" machine...
Read more on Politics Balla
 
Asian Games: Bajrang wins silver, Narsingh bronze
Incheon, Sep 29 (IANS) Indian wrestler Bajrang had to remain content with the silver medal after losing his final bout while his compatriot Narsingh Pancham Yadav clinched the bronze in the 17th Asian Games at the...
Read more on Sport Balla
 
Modi US visit: Three Indian cities to be named for smart cities project
Washington/New Delhi, Sep 29 (IANS) Three Indian cities are in line to be adopted for the government's "smart cities" project by way of technology and infrastructure upgrade during Indian Prime Minister Narendra Modi's...
Read more on Politics Balla
 
Play after school makes the minds of kids sharper
New York, Sep 29 (IANS) If your child cannot wait to play after school, better not to restrict him, a study suggests. Moderate-to-vigorous physical activity for at least 60 minutes a day after school saw substantial...
Read more on Celebrity Balla
 
14 percent Britons have partners they have never met!
London, Sep 29 (IANS) In an indication of how much the virtual world has become part of our real lives, a survey has found that one in seven people in Britain has relationship with people he/she has only interacted...
Read more on Celebrity Balla