First Week of February 2014 Options Trading For Global Cash Access Holdings (GCA)

Investors in Global Cash Access Holdings Inc (GCA) saw new options begin trading this week, for the February 2014 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the GCA options chain for the new February 2014 contracts and identified the following call contract of particular interest.

The call contract at the $10.00 strike price has a current bid of 5 cents. If an investor was to purchase shares of GCA stock at the current price level of $9.48/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $10.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 6.01% if the stock gets called away at the February 2014 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if GCA shares really soar, which is why looking at the trailing twelve month trading history for Global Cash Access Holdings Inc, as well as studying the business fundamentals becomes important. Below is a chart showing GCA's trailing twelve month trading history, with the $10.00 strike highlighted in red:

Loading+chart++2013+TickerTech.com

Considering the fact that the $10.00 strike represents an approximate 5% 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 61%. 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 0.53% boost of extra return to the investor, or 3.21% 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 36%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $9.48) to be 29%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

More from Stocks

Quick Read: 3 Things for Investors to Know Before Wednesday's Trading Session

Quick Read: 3 Things for Investors to Know Before Wednesday's Trading Session

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Replay: Jim Cramer on the Markets, Oil, General Electric, Zillow and Micron

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Micron Shares Soar; Chipmaker Is 'Managing for Profitability' Now, Says Analyst

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline

Dow Slips 178 Points; S&P 500 and Nasdaq Also Decline