First Week Of DGX December 21st Options Trading

Investors in Quest Diagnostics, Inc. ( DGX) saw new options become available this week, for the December 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the DGX options chain for the new December 21st contracts and identified one put and one call contract of particular interest.

The put contract at the $55.00 strike price has a current bid of 45 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $55.00, but will also collect the premium, putting the cost basis of the shares at $54.55 (before broker commissions). To an investor already interested in purchasing shares of DGX, that could represent an attractive alternative to paying $58.59/share today.

Because the $55.00 strike represents an approximate 6% discount 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 put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 80%. Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 0.82% return on the cash commitment, or 4.97% annualized — at Stock Options Channel we call this the YieldBoost.

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

Below is a chart showing the trailing twelve month trading history for Quest Diagnostics, Inc., and highlighting in green where the $55.00 strike is located relative to that history:

If you liked this article you might like

Cramer: These Sectors Look Bullish (Part III)

Cramer: There Are Powerful Themes in Several Bull Markets

Stanley Black & Decker, Quest Diagnostics and 2 More Could Rocket Higher This Spring -- Here's Why

MasterCard, Intuitive Surgical and 2 More Could Rocket Higher This Spring--Here's Why …

Market Recon: If You Are Scared, Don't Show It