Interesting January 2015 Stock Options for INTC

Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is Intel Corp (INTC). So this week we highlight one interesting put contract, and one interesting call contract, from the January 2015 expiration for INTC.The put contract our YieldBoost algorithm identified as particularly interesting, is at the $22 strike, which has a bid at the time of this writing of 49 cents. Collecting that bid as the premium represents a 2.2% return against the $22 commitment, or a 3.2% annualized rate of return (at Stock Options Channel we call this the YieldBoost).

START SLIDESHOW:
Top YieldBoost INTC Puts »

Selling a put does not give an investor access to INTC's upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. So unless Intel Corp sees its shares decline 16% and the contract is exercised (resulting in a cost basis of $21.51 per share before broker commissions, subtracting the 49 cents from $22), the only upside to the put seller is from collecting that premium for the 3.2% annualized rate of return.

Turning to the other side of the option chain, we highlight one call contract of particular interest for the January 2015 expiration, for shareholders of Intel Corp ( INTC) looking to boost their income beyond the stock's 3.4% annualized dividend yield. Selling the covered call at the $29 strike and collecting the premium based on the 58 cents bid, annualizes to an additional 3.1% rate of return against the current stock price (this is what we at Stock Options Channel refer to as the YieldBoost), for a total of 6.6% annualized rate in the scenario where the stock is not called away. Any upside above $29 would be lost if the stock rises there and is called away, but INTC shares would have to advance 10.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13% return from this trading level, in addition to any dividends collected before the stock was called.

START SLIDESHOW:
Top YieldBoost INTC Calls »

The chart below shows the trailing twelve month trading history for Intel Corp, highlighting in green where the $22 strike is located relative to that history, and highlighting the $29 strike in red:

Loading+chart++2014+TickerTech.com

The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the January 2015 put or call options highlighted in this article deliver a rate of return that represents good reward for the risks. We calculate the trailing twelve month volatility for Intel Corp (considering the last 251 trading day INTC historical stock prices using closing values, as well as today's price of $26.17) to be 19%.

More from Stocks

Danica Patrick's Final Race at 2018 Indianapolis 500: What She Thinks About Cars

Danica Patrick's Final Race at 2018 Indianapolis 500: What She Thinks About Cars

Why The FANG Stocks' Dominance May Not Be So Bad For The Market

Why The FANG Stocks' Dominance May Not Be So Bad For The Market

At End of May, Investors Signalling They May Stay Away

At End of May, Investors Signalling They May Stay Away

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Inside Carnival's Mind Blowing New Horizon Cruise Ship (Video)

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever

Neel Kashkari: The Heart of Our Financial System Is More Radioactive Than Ever