Loading+chart++2013+TickerTech.com

Turning to the calls side of the option chain, the call contract at the $35.00 strike price has a current bid of 40 cents. If an investor was to purchase shares of GEO stock at the current price level of $33.05/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $35.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 7.11% if the stock gets called away at the November 16th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if GEO shares really soar, which is why looking at the trailing twelve month trading history for GEO Group, Inc., as well as studying the business fundamentals becomes important. Below is a chart showing GEO's trailing twelve month trading history, with the $35.00 strike highlighted in red:

Loading+chart++2013+TickerTech.com

Considering the fact that the $35.00 strike represents an approximate 6% 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 70%. 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 1.21% boost of extra return to the investor, or 8.17% annualized, which we refer to as the YieldBoost.

START SLIDESHOW:
Top YieldBoost Calls of the S&P 500 »

The implied volatility in the put contract example is 33%, while the implied volatility in the call contract example is 30%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 249 trading day closing values as well as today's price of $33.05) to be 25%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

null

If you liked this article you might like

Why the Boardroom Doesn't Need Ivy League Degrees

Watchdog Group Sues Justice Department for Records on Private Prison Decisions

Private Prison Operator That Backed Trump Gets Contracts for Criminal Immigrants Facilities

Private Prison Operators Skyrocket Under the Trump Administration

Anti-Trump Activists Find an Unlikely Weapon: Jamie Dimon's Salary