August 21st Options Now Available For Newpark Resources (NR)

Investors in Newpark Resources, Inc. (NR) saw new options become available today, for the August 21st expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the NR options chain for the new August 21st contracts and identified the following call contract of particular interest.

The call contract at the $7.50 strike price has a current bid of 5 cents. If an investor was to purchase shares of NR stock at the current price level of $7.30/share, and then sell-to-open that call contract as a "covered call," they are committing to sell the stock at $7.50. Considering the call seller will also collect the premium, that would drive a total return (excluding dividends, if any) of 3.42% if the stock gets called away at the August 21st expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if NR shares really soar, which is why looking at the trailing twelve month trading history for Newpark Resources, Inc., as well as studying the business fundamentals becomes important. Below is a chart showing NR's trailing twelve month trading history, with the $7.50 strike highlighted in red:

Loading+chart++2015+TickerTech.com

Considering the fact that the $7.50 strike represents an approximate 3% 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 51%. 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 0.68% boost of extra return to the investor, or 4.17% 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 49%. Meanwhile, we calculate the actual trailing twelve month volatility (considering the last 251 trading day closing values as well as today's price of $7.30) to be 44%. For more put and call options contract ideas worth looking at, visit StockOptionsChannel.com.

More from Stocks

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Video: There Are Some Big Changes Coming to the PGA Championships in 2019

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Tesla's Supercharger Network Is Booming -- Here's Why That's a Concern

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Tesla CEO Elon Musk Is a Rock Star: Kiss Icon Gene Simmons

Tesla CEO Elon Musk Is a Rock Star: Kiss Icon Gene Simmons

The Best Investment Advice? Stay Diversified

The Best Investment Advice? Stay Diversified