Turning to the other side of the option chain, we highlight one call contract of particular interest for the May expiration, for shareholders of Intel Corp (INTC) looking to boost their income beyond the stock's 3.7% annualized dividend yield. Selling the covered call at the $25 strike and collecting the premium based on the 69 cents bid, annualizes to an additional 10.8% rate of return against the current stock price (this is what we at Stock Options Channel refer to as the YieldBoost), for a total of 14.6% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but INTC shares would have to climb 3.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6% return from this trading level, in addition to any dividends collected before the stock was called.
The chart below shows the trailing twelve month trading history for Intel Corp, highlighting in green where the $22 strike is located relative to that history, and highlighting the $25 strike in red:The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the May put or call options highlighted in this article deliver a rate of return that represents good reward for the risks. We calculate the trailing twelve month volatility for Intel Corp (considering the last 251 trading day INTC historical stock prices using closing values, as well as today's price of $24.22) to be 20%. In mid-afternoon trading on Monday, the put volume among S&P 500 components was 725,916 contracts, with call volume at 725,916, for a put:call ratio of 0.71 so far for the day, which is above normal compared to the long-term median put:call ratio of .65. In other words, if we look at the number of call buyers and then use the long-term median to project the number of put buyers we'd expect to see, we're actually seeing more put buyers than expected out there in options trading so far today. Find out which 15 call and put options traders are talking about today.