Investors in Penn Virginia Corp. (PVA) saw new options begin trading today, for the January 2016 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 795 days until expiration the newly trading contracts represent a possible 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 PVA options chain for the new January 2016 contracts and identified the following call contract of particular interest.The call contract at the $10.00 strike price has a current bid of 35 cents. If an investor was to purchase shares of PVA stock at the current price level of $8.99/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $10.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 15.13% if the stock gets called away at the January 2016 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if PVA shares really soar, which is why looking at the trailing twelve month trading history for Penn Virginia Corp., as well as studying the business fundamentals becomes important. Below is a chart showing PVA's trailing twelve month trading history, with the $10.00 strike highlighted in red:
January 2016 Options Now Available For Penn Virginia (PVA)
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
More than 30 investing pros with skin in the game give you actionable insight and investment ideas.