IInvestors in Ansys Inc. (Symbol: ANSS) New options begin trading today, to expire on December 16th. One of the main inputs into the price an option buyer is willing to pay, is the time value, so with 319 days to expiration, new trading contracts present a potential opportunity for call or buy sellers to make a higher premium than they might otherwise get. Available for contracts with the closest expiration. On the Stock Options Channel, our YieldBoost formula looked up and down the ANSS New Contract Options Chain on December 16 and identified one buy contract and one call contract of particular interest.
The sell contract at the strike price of $310.00 has a current bid of $31.40. If the investor had to sell this short contract to open, he would commit to buying the stock at $310.00, but would also collect the premium, setting the cost basis for the shares at $278.60 (before broker commissions). For an investor already interested in buying ANSS shares, this could be an attractive alternative to paying $334.88/share today.
Since the $310.00 strike represents an approximate 7% discount to the stock’s current trading price (in other words, it’s out of the money by that percentage), there’s also the possibility that the sell contract will expire worthless. Current analytical data (including the Greek and the implied Greek) indicate that the current odds of this happening are 67%. The Stock Options Channel will track those odds over time to see how they change, and publish a chart of these numbers on our website under the contract detail page for this contract. If the contract expires worthless, the premium would represent a return of 10.13% on the cash obligation, or 11.59% per annum – in Stock Options Channel we call this YieldBoost.
Below is a chart showing the trading history for the next twelve months for Ansys Inc. , and highlights in green where the $310.00 hit was for that date:
Moving to the ask side of the options chain, a call contract with a strike price of $340.00 has a current bid of $42.30. If an investor had to buy shares of ANSS stock at the current price level of $334.88/share, and then sell that buy contract to open it as a “covered call,” he is obligated to sell the stock at $344.00/share. Given that the call seller would also collect the premium, which would yield a total return (excluding dividends, if any) of 14.16% if the stock was called at expiration on December 16th (before broker commissions). Of course, a lot of upside could be left on the table if ANSS shares really rose, which is why looking at Ansys Inc’s twelve-month trading history. , In addition to studying the basics of business becomes important. Below is a chart showing the twelve-month trading history of ANSS, with the $340.00 strike highlighted in red:
Given the fact that the $340.00 strike represents an approximate premium of 2% over the stock’s current trading price (in other words, it’s not available at that percentage), there’s also the possibility that the covered call will expire worthless, in which case the investor keeps both of his or her shares of shares and premium collected. Current analytical data (including the Greek and the implied Greek) indicate that the current odds of this happening are 45%. On our website under the Contract Details page for this contract, the Stock Options Channel will track those odds over time to see how they change and publish a chart of these numbers (the option contract trading history will also be plotted). Should the covered call contract expire worthless, the premium would represent a 12.63% increase in the investor’s additional return, or 14.45% per annum, which we refer to as YieldBoost.
The implied volatility in the sell contract example is 39%, while the implied volatility in the buy contract example is 37%.
In the meantime, we calculate the actual twelve-month volatility (taking into account the closing values of the last 252 trading days plus today’s price of $334.88) to be 32%. For more call and put options contract ideas worth looking at, visit StockOptionsChannel.com.
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