Interesting GT put and call options for January 2022
IInvestors in Goodyear Tire & Rubber Co. (ticker: GT) saw new options start trading today, with the January 2022 expiration. Stock option channel, our YieldBoost formula walked the GT options chain for new January 2022 contracts and identified a sale contract and a purchase contract of particular interest.
The contract to sell at the strike price of $ 22.00 has a current bid of $ 1.20. If an investor were to sell to open that sales contract, he agrees to buy the stock at $ 22.00, but will also collect the premium, putting the base price of the stock at $ 20.80 (before broker commissions ). For an investor already interested in buying GT shares, this could represent an attractive alternative to paying $ 22.68 / share today.
Since the strike price of $ 22.00 represents a discount of around 3% from the current share price (in other words, it is out of the money by that percentage), it is also possible that the sales contract expires worthless. Current analytical data (including Greeks and Greeks implied) suggests that the current chance of this happening is 99%. Stock Options Channel will monitor these quotes over time to see how they evolve, posting a chart of these numbers on our website under contract detail page for this contract. If the contract expires worthless, the premium would represent a return of 5.45% on the cash commitment, or 39.82% annualized – at Stock Options Channel we call that the Yield boost.
Below is a chart showing Goodyear Tire & Rubber Co.’s past twelve month trading history, and highlighting in green the location of the $ 22.00 strike against that history:
With respect to the options chain call options, the strike price call contract of $ 23.00 has a current bid of $ 1.40. If an investor were to buy GT shares at the current price level of $ 22.68 / share and then sell to open that purchase contract as a ‘covered call’, they agree to sell the share at 23, $ 00. Since the call seller will also receive the premium, this would generate a total return (excluding dividends, if any) of 7.58% if the stock was recalled at the January 2022 expiration (before broker commissions) . Of course, a lot of advantages could be left on the table if GT shares really soar, which is why it becomes important to look at Goodyear Tire & Rubber Co.’s past twelve month trading history, as well as studying the fundamentals of the business. Below is a chart showing GT’s past twelve months trading history, with the strike price of $ 23.00 highlighted in red:
Since the strike price of $ 23.00 represents a premium of around 1% over the current share price (in other words, it’s out of the money by that percentage), it is It is also possible that the covered purchase contract will expire worthless, in which case the investor would keep both his shares and the premium received. Current analytical data (including Greeks and Greeks implied) suggests that the current chance of this happening is 99%. On our website under contract detail page for this contract, Stock Options Channel will track these quotes over time to see how they change and publish a chart of these numbers (the option contract’s trading history will also be plotted). If the covered purchase contract expires worthless, the premium would represent an increase of 6.17% in the additional return to the investor, or 45.06% annualized, which we call the Yield boost.
Meanwhile, we’re calculating the actual volatility for the past twelve months (taking into account the closing values of the past 252 trading days as well as today’s price of $ 22.68) to be 48%. For more put and call option contract ideas worth considering, visit StockOptionsChannel.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.