360° Coverage : Interesting AON Put And Call Options For June 21st

2 Updates

Interesting AON Put And Call Options For June 21st

Apr 21 2014, 11:38am CDT | by

Investors in Aon plc (NYSE: AON) saw new options become available today, for the June 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AON options chain...

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20 weeks ago

Interesting AON Put And Call Options For June 21st

Apr 21 2014, 11:38am CDT | by

Investors in Aon plc (NYSE: AON) saw new options become available today, for the June 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AON options chain for the new June 21st contracts and identified one put and one call contract of particular interest.

The put contract at the $80.00 strike price has a current bid of $1.75. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $80.00, but will also collect the premium, putting the cost basis of the shares at $78.25 (before broker commissions). To an investor already interested in purchasing shares of AON, that could represent an attractive alternative to paying $81.85/share today.

Because the $80.00 strike represents an approximate 2% 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 61%. 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 2.19% return on the cash commitment, or 13.09% 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 Aon plc, and highlighting in green where the $80.00 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $82.50 strike price has a current bid of $2.35. If an investor was to purchase shares of AON stock at the current price level of $81.85/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $82.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 3.67% if the stock gets called away at the June 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if AON shares really soar, which is why looking at the trailing twelve month trading history for Aon plc, as well as studying the business fundamentals becomes important. Below is a chart showing AON’s trailing twelve month trading history, with the $82.50 strike highlighted in red:

Considering the fact that the $82.50 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 52%. 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 2.87% boost of extra return to the investor, or 17.18% 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 21%, while the implied volatility in the call contract example is 23%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today’s price of $81.85) to be 20%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.Interesting AON Put And Call Options For June 21st

 
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 20,000 by 30 p ...
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 tragedies of MH370 and MH17 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

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