Interesting GEN Call Options For October 16th

Investors in Genesis Healthcare Inc ( GEN) saw new options become available this week, for the October 16th expiration. One of the key inputs that goes into the price an option buyer is willing to pay, is the time value, so with 109 days until expiration the newly available contracts represent a potential 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 GEN options chain for the new October 16th contracts and identified the following call contract of particular interest.

The call contract at the $7.50 strike price has a current bid of 30 cents. If an investor was to purchase shares of GEN stock at the current price level of $6.75/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 15.56% if the stock gets called away at the October 16th expiration (before broker commissions). Of course, a lot of upside could potentially be left on the table if GEN shares really soar, which is why looking at the trailing twelve month trading history for Genesis Healthcare Inc, as well as studying the business fundamentals becomes important. Below is a chart showing GEN's trailing twelve month trading history, with the $7.50 strike highlighted in red:

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