Exploring Exciting Put and Call Options for May 17th

Diving into the Options Chain

Today, new options for the May 17th expiration have started trading for Ford Motor Co. (Symbol: F), offering investors an intriguing opportunity to dive into the options chain. With 128 days until expiration, these newly trading contracts present a prospect for sellers of puts or calls to command a higher premium compared to contracts with a closer expiration.

One enticing put contract at the $11.00 strike price currently stands with a bid of 58 cents. Selling this put contract would mean committing to purchase the stock at $11.00 while collecting the premium, effectively setting the cost basis of the shares at $10.42, providing an alluring alternative to paying $11.78/share today.

Considering that the $11.00 strike represents an approximate 7% discount to the current trading price of the stock, there is a possibility that the put contract could expire worthless, offering a potential 5.27% return on the cash commitment or 15.04% annualized – referred to as the YieldBoost by Stock Options Channel.

Charting the Path Forward

On the calls side of the option chain, the call contract at the $13.00 strike price comes with a current bid of 40 cents. Selling this call contract as a “covered call” after purchasing shares of F stock at the current price level of $11.78/share means committing to sell the stock at $13.00. This translates to a total return of 13.75%, should the stock get called away at the May 17th expiration.

Considering the fact that the $13.00 strike represents an approximate 10% premium to the current trading price of the stock, there is a possibility that the covered call contract could expire worthless, offering a potential 3.40% extra return to the investor, or 9.69% annualized, known as the YieldBoost.