Investors in Gran Tierra Energy Inc (GTE - Get Report) saw new options begin trading today, for the July expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the GTE options chain for the new July contracts and identified the following call contract of particular interest.The call contract at the $7.50 strike price has a current bid of 05 cents. If an investor was to purchase shares of GTE stock at the current price level of $6.40/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $7.50. Considering the call seller will also collect the premium, that would drive a total return of 17.97% if the stock gets called away at the July expiration (before broker commissions). If course, a lot of upside could potentially be left on the table if GTE shares really soar, which is why looking at the trailing twelve month trading history for Gran Tierra Energy Inc, as well as studying the business fundamentals becomes important. Below is a chart showing GTE's trailing twelve month trading history, with the $7.50 strike highlighted in red: Considering the fact that the $7.50 strike represents an approximate 17% 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 81%. 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 0.78% boost of extra return to the investor, or 4.67% annualized, which we refer to as the YieldBoost. The implied volatility in the call contract example above is 40%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 248 trading day closing values as well as today's price of $6.40) to be 40%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
One Tweet to Rule Them All? Jim Cramer Talks Trump's Twitter, Facebook, Boeing
Jim Cramer breaks down what investors need to know about the markets, whether or not Boeing is to be trusted following NBC and Wall Street Journal's survey, and Facebook's push into cryptocurrency.
Stifel in Talks to Acquire Canada-Based GMP Capital - Report
Stifel Financial is in talks to acquire Toronto-based GMP Capital in a deal that would see a U.S. company swallow one of the last independent investment banks in Canada, according to The Globe and Mail.
Symantec Is Upgraded to Buy at Mizuho on Attractive Valuation
Mizuho upgrades the stock to buy from neutral, and lifts the stock price to $23 from $22.
Sotheby's to Be Bought by BidFair for $3.7 Billion
Famed auction house Sotheby's hits the gavel on itself on Monday, announcing it has agreed to be acquired by BidFair USA, an entity wholly owned by media and telecom entrepreneur and art collector Patrick Drahi.