Investors in Northern Dynasty Minerals Ltd. (NAK) saw new options become available this week, for the May 2014 expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 227 days until expiration the newly available contracts represent a potential opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the NAK options chain for the new May 2014 contracts and identified the following call contract of particular interest.The call contract at the $5.00 strike price has a current bid of 5 cents. If an investor was to purchase shares of NAK stock at the current price level of $1.66/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $5.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 204.22% if the stock gets called away at the May 2014 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if NAK shares really soar, which is why looking at the trailing twelve month trading history for Northern Dynasty Minerals Ltd., as well as studying the business fundamentals becomes important. Below is a chart showing NAK's trailing twelve month trading history, with the $5.00 strike highlighted in red:
First Week Of May 2014 Options Trading For Northern Dynasty Minerals (NAK)
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