January 2014 Options Now Available For ELN

Investors in Elan Corp plc ( ELN) saw new options begin trading today, for the January 2014 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the ELN options chain for the new January 2014 contracts and identified the following put contract of particular interest.

The put contract at the $17.50 strike price has a current bid of 5 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $17.50, but will also collect the premium, putting the cost basis of the shares at $17.45 (before broker commissions). To an investor already interested in purchasing shares of ELN, that could represent an attractive alternative to paying $17.66/share today.

Because the $17.50 strike represents an approximate 1% 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 55%. 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 0.29% return on the cash commitment, or 3.60% 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 Elan Corp plc, and highlighting in green where the $17.50 strike is located relative to that history:

If you liked this article you might like

Experimental Tau Protein Drug Tangled Up in Late-Stage Alzheimer's Study Failure

With Martin Shkreli Long Gone, Retrophin is an 'Interesting Opportunity'

Despite Shkreli Drama, Retrophin Looks Interesting Now

Celtic Tiger Tries to Roar Again

Cramer's 6 Stocks in 60 Seconds: PRGO CREE HOG GME ORCL MHK (Update 1)