This Day On The Street
Continue to site
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

Interesting January 2015 Stock Options For Home Depot

Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is Home Depot Inc (HD). So this week we highlight one interesting put contract, and one interesting call contract, from the January 2015 expiration for HD. The put contract our YieldBoost algorithm identified as particularly interesting, is at the $60 strike, which has a bid at the time of this writing of $2.60. Collecting that bid as the premium represents a 4.3% return against the $60 commitment, or a 3.5% annualized rate of return (at Stock Options Channel we call this the YieldBoost).

START SLIDESHOW:
Top YieldBoost HD Puts »

Selling a put does not give an investor access to HD's upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. So unless Home Depot Inc sees its shares fall 21.1% and the contract is exercised (resulting in a cost basis of $57.40 per share before broker commissions, subtracting the $2.60 from $60), the only upside to the put seller is from collecting that premium for the 3.5% annualized rate of return.

Interestingly, that annualized 3.5% figure actually exceeds the 2.1% annualized dividend paid by Home Depot Inc by 1.4%, based on the current share price of $76.04. And yet, if an investor was to buy the stock at the going market price in order to collect the dividend, there is greater downside because the stock would have to lose 21.08% to reach the $60 strike price.

1 of 3

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 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs