Buyers in GEO Group Inc (Image: GEO) noticed new choices start buying and selling immediately, for the March twenty eighth expiration. At Stock Options Channel, our YieldBoost formulation has regarded up and down the GEO choices chain for the brand new March twenty eighth contracts and recognized one put and one name contract of specific curiosity.
The put contract on the $28.00 strike worth has a present bid of 80 cents. If an investor was to sell-to-open that put contract, they’re committing to buy the inventory at $28.00, however will even gather the premium, placing the associated fee foundation of the shares at $27.20 (earlier than dealer commissions). To an investor already excited by buying shares of GEO, that would symbolize a gorgeous various to paying $28.30/share immediately.
As a result of the $28.00 strike represents an approximate 1% low cost to the present buying and selling worth of the inventory (in different phrases it’s out-of-the-money by that proportion), there may be additionally the likelihood that the put contract would expire nugatory. The present analytical information (together with greeks and implied greeks) counsel the present odds of that taking place are 58%. Inventory Choices Channel will observe these odds over time to see how they modify, publishing a chart of these numbers on our web site below the contract detail page for this contract. Ought to the contract expire nugatory, the premium would symbolize a 2.86% return on the money dedication, or 20.87% annualized — at Inventory Choices Channel we name this the YieldBoost.
Beneath is a chart exhibiting the trailing twelve month buying and selling historical past for GEO Group Inc, and highlighting in inexperienced the place the $28.00 strike is situated relative to that historical past:
Turning to the calls facet of the choice chain, the decision contract on the $29.00 strike worth has a present bid of 85 cents. If an investor was to buy shares of GEO inventory on the present worth degree of $28.30/share, after which sell-to-open that decision contract as a “coated name,” they’re committing to promote the inventory at $29.00. Contemplating the decision vendor will even gather the premium, that may drive a complete return (excluding dividends, if any) of 5.48% if the inventory will get known as away on the March twenty eighth expiration (earlier than dealer commissions). In fact, lots of upside might doubtlessly be left on the desk if GEO shares actually soar, which is why wanting on the trailing twelve month buying and selling historical past for GEO Group Inc, in addition to finding out the enterprise fundamentals turns into essential. Beneath is a chart exhibiting GEO’s trailing twelve month buying and selling historical past, with the $29.00 strike highlighted in purple:
Contemplating the truth that the $29.00 strike represents an approximate 2% premium to the present buying and selling worth of the inventory (in different phrases it’s out-of-the-money by that proportion), there may be additionally the likelihood that the coated name contract would expire nugatory, through which case the investor would maintain each their shares of inventory and the premium collected. The present analytical information (together with greeks and implied greeks) counsel the present odds of that taking place are 47%. On our web site below the contract detail page for this contract, Inventory Choices Channel will observe these odds over time to see how they modify and publish a chart of these numbers (the buying and selling historical past of the choice contract will even be charted). Ought to the coated name contract expire nugatory, the premium would symbolize a 3.00% increase of additional return to the investor, or 21.94% annualized, which we seek advice from because the YieldBoost.
The implied volatility within the put contract instance is 75%, whereas the implied volatility within the name contract instance is 77%.
In the meantime, we calculate the precise trailing twelve month volatility (contemplating the final 250 buying and selling day closing values in addition to immediately’s worth of $28.30) to be 59%. For extra put and name choices contract concepts value , go to StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
