Latest News: Technology |  Celebrity |  Movies |  Apple |  Cars |  Business |  Sports |  TV Shows |  Geek

Trending

Filed under: News

 

Loews February 2014 Options Begin Trading

Loews February 2014 Options Begin Trading
Photo Credit: Forbes
 
 

Investors in Loews Corp. (NYSE: L) saw new options become available today, for the February 2014 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the L options chain for the new February 2014 contracts and identified one put and one call contract of particular interest.

The put contract at the $45.00 strike price has a current bid of 20 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $45.00, but will also collect the premium, putting the cost basis of the shares at $44.80 (before broker commissions). To an investor already interested in purchasing shares of L, that could represent an attractive alternative to paying $47.87/share today.

Because the $45.00 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 81%. 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 0.44% return on the cash commitment, or 2.66% 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 Loews Corp., and highlighting in green where the $45.00 strike is located relative to that history:

Turning to the calls side of the option chain, the call contract at the $50.00 strike price has a current bid of 20 cents. If an investor was to purchase shares of L stock at the current price level of $47.87/share, and then sell-to-open that call contract as a “covered call,” they are committing to sell the stock at $50.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.87% if the stock gets called away at the February 2014 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if L shares really soar, which is why looking at the trailing twelve month trading history for Loews Corp., as well as studying the business fundamentals becomes important. Below is a chart showing L’s trailing twelve month trading history, with the $50.00 strike highlighted in red:

Considering the fact that the $50.00 strike represents an approximate 4% 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 74%. 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 0.42% boost of extra return to the investor, or 2.50% 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 18%, while the implied volatility in the call contract example is 16%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today’s price of $47.87) to be 14%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

Source: Forbes

iPad Air Giveaway. Win a free iPad Air.

You Might Also Like

Updates

Shopping Deals

 
 
 

<a href="/latest_stories/all/all/31" 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.

 

 

Comments

blog comments powered by Disqus

Latest stories

Microsoft set to unveil Windows 9 on September 30th
Microsoft set to unveil Windows 9 on September 30th
While Threshold is likely to be named Windows 9, it’s unlikely that Microsoft will name its upcoming Windows release at its press event.
 
 
Tara Reid Wears Revealing Dress at Sharknado 2 Screening
Tara Reid Wears Revealing Dress at Sharknado 2 Screening
Sharknado 2 hit the big screen yesterday in LA. Tara Reid used the occasion for a dramatic red carpet appearance. How does this dress stay on her boobs?
 
 
Mariah Carey Feels Sorry About her Marital Issues
Mariah Carey Feels Sorry About her Marital Issues
The pop diva, Mariah Carey feels sorry about her marital issues. Her problems with her husband may offer trouble in the future for the rich and famous songstress.
 
 
Rear Panels Of 5.5-inch iPhone 6 In Latest Leak
Rear Panels Of 5.5-inch iPhone 6 In Latest Leak
The 4.7-inch iPhone 6 and the unofficially-named ‘iPhone 6L’ will play out like the smartphone version of the iPad mini 2 and iPad Air.
 
 
 

About the Geek Mind

The “geek mind” is concerned with more than just the latest iPhone rumors, or which company will win the gaming console wars. I4U is concerned with more than just the latest photo shoot or other celebrity gossip.

The “geek mind” is concerned with life, in all its different forms and facets. The geek mind wants to know about societal and financial issues, both abroad and at home. If a Fortune 500 decides to raise their minimum wage, or any high priority news, the geek mind wants to know. The geek mind wants to know the top teams in the National Football League, or who’s likely to win the NBA Finals this coming year. The geek mind wants to know who the hottest new models are, or whether the newest blockbuster movie is worth seeing. The geek mind wants to know. The geek mind wants—needs—knowledge.

Read more about The Geek Mind.