This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

First Week Of September 21st Options Trading For Exelis (XLS)

Investors in Exelis Inc. (XLS) saw new options begin trading this week, for the September 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the XLS options chain for the new September 21st contracts and identified the following call contract of particular interest.

The call contract at the $15.00 strike price has a current bid of 55 cents. If an investor was to purchase shares of XLS stock at the current price level of $14.88/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $15.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.50% if the stock gets called away at the September 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if XLS shares really soar, which is why looking at the trailing twelve month trading history for Exelis Inc., as well as studying the business fundamentals becomes important. Below is a chart showing XLS's trailing twelve month trading history, with the $15.00 strike highlighted in red:

Loading+chart++2013+TickerTech.com

Considering the fact that the $15.00 strike represents an approximate 1% premium to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the covered call contract would expire worthless, in which case the investor would keep both their shares of stock and the premium collected. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 52%. On our website under the contract detail page for this contract, Stock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the trading history of the option contract will also be charted). Should the covered call contract expire worthless, the premium would represent a 3.70% boost of extra return to the investor, or 22.87% annualized, which we refer to as the YieldBoost.

START SLIDESHOW:
Top YieldBoost Calls of the S&P 500 »

The implied volatility in the call contract example above is 29%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 249 trading day closing values as well as today's price of $14.88) to be 26%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

null

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs