Investors keeping a keen eye on Ford Motor Co. (Symbol: F) witnessed intriguing options emerging today, slated for the November 22nd expiration. The options playing field, a realm akin to the Wild West of finance, offers a myriad of thrilling opportunities. Today we’ll explore a specific put and call contract that has caught the attention of astute market participants.
The Allure of Put Options
Let’s begin our quest by diving into the put side of the options chain, where a contract at the $10.00 strike is beckoning at a bid of 41 cents. For intrepid investors looking to wander off the beaten path, selling-to-open this put contract could be a compelling proposition. By committing to purchasing the stock at $10.00 and collecting the premium, one could potentially secure shares at an attractive cost basis of $9.59. An enticing prospect indeed, especially when juxtaposed with the current share price of $10.43.
Viewed through the lens of history, the $10.00 strike presents a tantalizing 4% discount to the prevailing stock price – existing as an out-of-the-money oasis in the vast desert of market volatility. As the sands of time sift through the hourglass, the odds of this put contract expiring worthless stand at 63%. An intriguing gamble, with the potential to yield a 4.10% return or 29.91% annualized; a captivating dance with risk and reward.
The Temptation of Call Options
Shifting our gaze to the calls side, an alluring call contract at the $10.50 strike whispers a siren song with a bid of 55 cents. Imagine a scenario where an investor acquires F shares at $10.43, and then ventures to sell-to-open this call contract in a “covered call” maneuver. By committing to sell at $10.50, the call seller stands to reap a sumptuous total return of 5.94% if the stock ascends to those heights by the November 22nd expiration.
Nevertheless, the call seller must tread cautiously to avoid leaving any golden nuggets on the table should F shares skyrocket. History reveals that the $10.50 strike entices with a 1% premium to the current share price – a lighthouse guiding investors through the stormy seas of market unpredictability. With the odds of this covered call contract expiring worthless standing at 49%, the premium could serve as a boon, bestowing a 5.27% boost or 38.46% annualized return; a veritable feast for the discerning investor.
Volatility and Beyond
Both the put and call examples enchant with an implied volatility of approximately 41%, casting a spell of uncertainty and excitement over the options market. Yet, casting our eyes deeper into the realms of market history, the actual trailing twelve month volatility unfurls at 39%, painting a vivid picture of market dynamics and fluctuations.
For those curious souls seeking more inspiration on put and call option gems, a visit to StockOptionsChannel.com promises further explorations into this landscape of financial alchemy.