Investors in First Majestic Silver Corp (AG - Get Report) saw new options become available this week, for the February 2015 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AG options chain for the new February 2015 contracts and identified the following call contract of particular interest.The call contract at the $5.00 strike price has a current bid of 45 cents. If an investor was to purchase shares of AG stock at the current price level of $4.83/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $5.00. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 12.84% if the stock gets called away at the February 2015 expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if AG shares really soar, which is why looking at the trailing twelve month trading history for First Majestic Silver Corp, as well as studying the business fundamentals becomes important. Below is a chart showing AG's trailing twelve month trading history, with the $5.00 strike highlighted in red: Considering the fact that the $5.00 strike represents an approximate 4% 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 49%. 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 9.32% boost of extra return to the investor, or 57.64% annualized, which we refer to as the YieldBoost. The implied volatility in the call contract example above is 70%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 252 trading day closing values as well as today's price of $4.83) to be 58%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.
More from Stocks
Top 5 Stock Winners in Dow Jones Industrial Average This Week
The Dow Jones Industrial Average finished Friday above 28000 for the first time ever. Here are the top 5 winning stocks in the Dow from this week.
Bottom 3 Loser Stocks in Dow Jones Industrial Average This Week
These 3 stocks did not help the Dow Jones Industrial Average finish Friday above 28000. Here are the bottom 3 losing stocks from this week.
Why Stock Charts Are a More Valuable Tool Than Ever
What I have found is that the real value of charts is as a trade management tool.
Novartis Still a Buy Despite Controversy Over Blockbuster Drug
Despite the issues that have bubbled up related to its breakthrough drug for spinal muscular atrophy, Zolgensma, Novartis "has the newest pipeline with many drugs just beginning to have an impact on the company's bottom line," Cramer told members of his Action Alerts PLUS club for investors during an exclusive video-conference call.