Investors in iStar Financial Inc (SFI) saw new options begin trading this week, for the December 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the SFI options chain for the new December 21st contracts and identified the following call contract of particular interest.The call contract at the $13.00 strike price has a current bid of 10 cents. If an investor was to purchase shares of SFI stock at the current price level of $12.93/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $13.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 1.31% 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 SFI shares really soar, which is why looking at the trailing twelve month trading history for iStar Financial Inc, as well as studying the business fundamentals becomes important. Below is a chart showing SFI's trailing twelve month trading history, with the $13.00 strike highlighted in red: Considering the fact that the $13.00 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 55%. 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 0.77% boost of extra return to the investor, or 35.29% annualized, which we refer to as the YieldBoost. The implied volatility in the call contract example above is 32%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $12.93) to be 29%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Stocks
Why Jim Cramer Is Worried About Big Tech Heading to Capitol Hill
Jim Cramer wrote about his hesitations about Big Tech--which includes Amazon, Alphabet and Facebook--in his Real Money column Wednesday morning.
From Earnings to Markets, Here's How Investors Should Navigate Both
Listen up, investors! Edward Jones' Investment Strategist, Kate Warne, gives a deep dive into earnings and markets, and what you should know to navigate both.
Microsoft's Big Cloud Deal With AT&T Stokes Competition With Amazon
The software giant's multibillion-dollar deal to provide cloud computing services to AT&T comes as the tech giant prepares to issues its quarterly earnings report on Thursday.
Zoom Video Communications Strength Is Worth Noting
I'm willing to risk what amounts to the move we've seen today for the next month.
LIVE NOW: Jim Cramer on How to Pick 'Super-High-Growth' Stocks
Tune in to Jim's VIP conference call and he'll teach you how to decide which stocks with super-high P/E ratios to buy and which to avoid.