Interesting CODE Put And Call Options For April 19th

Investors in Spansion Inc ( CODE) saw new options begin trading this week, for the April 19th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the CODE options chain for the new April 19th contracts and identified one put and one call contract of particular interest.

The put contract at the $15.00 strike price has a current bid of 25 cents. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $15.00, but will also collect the premium, putting the cost basis of the shares at $14.75 (before broker commissions). To an investor already interested in purchasing shares of CODE, that could represent an attractive alternative to paying $16.10/share today.

Because the $15.00 strike represents an approximate 7% 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 71%. 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 1.67% return on the cash commitment, or 11.49% 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 Spansion Inc, and highlighting in green where the $15.00 strike is located relative to that history:

If you liked this article you might like

Cypress Semiconductor Offers Rival Bid for Integrated Silicon Solution

Insider Trading Alert - NXST, CODE And KSS Traded By Insiders

Jim Cramer: I'm Making My Peace With This Happy Market

'Mad Money' Lightning Round: I Believe in Alcoa and Its CEO

Jim Cramer's 'Mad Money' Recap: Kicking Out Value for Old-Fashioned Growth Stocks