Commit To Buy Gevo At $1, Earn 30% Using Options Tuesday, October 17, 1:09 PM ET, by Market News Video Staff Investors considering a purchase of Gevo Inc (GEVO) stock, but cautious about paying the going ...
Notable Thursday Option Activity: QCOM, GEVO, ABNB Thursday, November 16, 3:22 PM ET, by Market News Video Staff Looking at options trading activity among components of the Russell 3000 index, there is noteworthy ...
Investors in Gevo Inc (NASDAQ:GEVO) saw new options begin trading this week, for the February 18th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the GEVO options chain for the new February 18th contracts and identified the following call contract of particular interest.
The call contract at the $5.00 strike price has a current bid of 10 cents. If an investor was to purchase shares of GEVO stock at the current price level of $4.04/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $5.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 26.24% if the stock gets called away at the February 18th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if GEVO shares really soar, which is why looking at the trailing twelve month trading history for Gevo Inc, as well as studying the business fundamentals becomes important. Below is a chart showing GEVO's trailing twelve month trading history, with the $5.00 strike highlighted in red:
Considering the fact that the $5.00 strike represents an approximate 24% 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 67%. 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 2.48% boost of extra return to the investor, or 29.14% annualized, which we refer to as the YieldBoost.
The implied volatility in the call contract example above is 106%.
Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $4.04) to be 103%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
This Article's Word Cloud:ArialBelowCallsChannelConsideringFebruaryGEVOGevoInvestorsOptionsStockYieldBoostalsocallchartcontractcoveredcurrentexpirationexpirefillColorgreekshistoryimpliedinvestorleftlookingmonthoddsoptionspremiumpricereturnsellsharesstockstrikethattheythisthosetradingtrailingtwelvevolatilitywellwhichwillworthlesswould
Any ideas and opinions presented in all Market News Video clips are for informational and educational purposes
only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners.
In no way should any content contained herein be interpreted to represent trading or investment advice.
None of the information contained herein constitutes a recommendation that any particular security, portfolio,
transaction, or investment strategy is suitable for any specific person. All viewers agree that under no
circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held
liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.
X
Wait! Don't leave yet.
Want to receive our latest research absolutely free?
⤹
Click the button below for your complimentary copy of Your Early Retirement Portfolio: Dividends Up to 8.7%—Every Month—Forever.
You'll discover the details on 4 stocks and funds that pay you massive dividends as high as 8.7%.