Interesting FET Call For November 16th

Investors in Forum Energy Technologies Inc ( FET) saw new options begin trading this week, for the November 16th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the FET options chain for the new November 16th contracts and identified the following call contract of particular interest.

The call contract at the $30.00 strike price has a current bid of 40 cents. If an investor was to purchase shares of FET stock at the current price level of $29.16/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $30.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 4.25% 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 FET shares really soar, which is why looking at the trailing twelve month trading history for Forum Energy Technologies Inc, as well as studying the business fundamentals becomes important. Below is a chart showing FET's trailing twelve month trading history, with the $30.00 strike highlighted in red:

Loading+chart++2013+TickerTech.com

Considering the fact that the $30.00 strike represents an approximate 3% 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 57%. 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 1.37% boost of extra return to the investor, or 13.52% annualized, which we refer to as the YieldBoost.

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

The implied volatility in the call contract example above is 34%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 250 trading day closing values as well as today's price of $29.16) to be 28%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

null

If you liked this article you might like

8 Stocks That Are Ready to Change Direction

8 Stocks That Are Ready to Change Direction

5 Stocks to Buy With Oil Prices Hitting Highs Again

5 Stocks to Buy With Oil Prices Hitting Highs Again

Halliburton, Other Oilfield Services Would Benefit With Tillerson as Secretary of State

Halliburton, Other Oilfield Services Would Benefit With Tillerson as Secretary of State

If Rex Tillerson Becomes Secretary of State, Oilfield Services Cos. See Possibility for Profit

If Rex Tillerson Becomes Secretary of State, Oilfield Services Cos. See Possibility for Profit

Stocks Slightly Lower as Crude Slumps, Nike Weighs on Dow

Stocks Slightly Lower as Crude Slumps, Nike Weighs on Dow