Investors in Curis Inc (CRIS - Get Report) saw new options begin trading this week, for the December 20th expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 229 days until expiration the newly trading contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the CRIS options chain for the new December 20th contracts and identified the following call contract of particular interest.The call contract at the $2.50 strike price has a current bid of 30 cents. If an investor was to purchase shares of CRIS stock at the current price level of $2.14/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $2.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 30.84% if the stock gets called away at the December 20th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if CRIS shares really soar, which is why looking at the trailing twelve month trading history for Curis Inc, as well as studying the business fundamentals becomes important. Below is a chart showing CRIS's trailing twelve month trading history, with the $2.50 strike highlighted in red: Considering the fact that the $2.50 strike represents an approximate 17% 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 45%. 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 14.02% boost of extra return to the investor, or 22.34% annualized, which we refer to as the YieldBoost. The implied volatility in the call contract example above is 89%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $2.14) to be 67%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
More from Stocks
Retailers Light It Up. Here is My Top Stock Pick in the Sector
I'm taking some shares of this recent IPO today.
Jim Cramer Breaks Down Target's Earnings and Fantasy Football
Jim Cramer weighs in on Target's earnings and why consumers need to go into the stores to really understand the stocks.
Tesla May Be Losing Market Share to European Rivals, Analyst Says
Alliance Bernstein's Toni Sacconaghi highlighted a worrisome sales trend in a note on Tuesday evening.
Target's Earnings Pop Likely Forces Shorts to Cover
With TGT trading around $100, here's our updated playbook.