Loading+chart++2013+TickerTech.com

Turning to the calls side of the option chain, the call contract at the $48.00 strike price has a current bid of $2.50. If an investor was to purchase shares of THC stock at the current price level of $47.36/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $48.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.63% if the stock gets called away at the December 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if THC shares really soar, which is why looking at the trailing twelve month trading history for Tenet Healthcare Corp., as well as studying the business fundamentals becomes important. Below is a chart showing THC's trailing twelve month trading history, with the $48.00 strike highlighted in red:

Loading+chart++2013+TickerTech.com

Considering the fact that the $48.00 strike represents an approximate 1% 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 50%. 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 5.28% boost of extra return to the investor, or 31.56% 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 38%, while the implied volatility in the call contract example is 37%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 249 trading day closing values as well as today's price of $47.36) to be 35%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

null

If you liked this article you might like

Friday Selloff May Be On Its Way; Tenet Gears Up for Sale -- ICYMI

Dow Posts Fresh Record, Third in a Row, but S&P 500 and Nasdaq Fall

Boeing, United Tech Lead Dow to Records but Rest of Market Flounders

No Buyers for All of Tenet, Analysts Say

Jim Cramer on Amazon, Walmart, Equifax, Tesla and Tenet Healthcare