Stock Options Channel
Play Video: How To Sell A PUT


If the video does not load after a few moments, Upgrade to the Latest Flash Player.
Quotes delayed 20 minutes
Get Free SEC filing alerts for ZION:
ZION SEC Filing Email Alerts ServiceExternal link

www.valueforum.com/7/
Free Stock Options Newsletter
Gain access to weekly reports with featured information for stock options enthusiasts.
Commit To Buy Zions Bancorporation At $35, Earn 5.9% Using Options
Stock Options Channel Staff - Tuesday, June 20, 11:37 AM

Investors eyeing a purchase of Zions Bancorporation (ZION) shares, but cautious about paying the going market price of $43.12/share, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the January 2019 put at the $35 strike, which has a bid at the time of this writing of $2.05. Collecting that bid as the premium represents a 5.9% return against the $35 commitment, or a 3.7% annualized rate of return (at Stock Options Channel we call this the YieldBoost).

Selling a put does not give an investor access to ZION'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. And the person on the other side of the contract would only benefit from exercising at the $35 strike if doing so produced a better outcome than selling at the going market price. (Do options carry counterparty risk? This and six other common options myths debunked). So unless Zions Bancorporation sees its shares fall 18.8% and the contract is exercised (resulting in a cost basis of $32.95 per share before broker commissions, subtracting the $2.05 from $35), the only upside to the put seller is from collecting that premium for the 3.7% annualized rate of return.

Worth considering, is that the annualized 3.7% figure actually exceeds the 0.8% annualized dividend paid by Zions Bancorporation by 2.9%, based on the current share price of $43.12. And yet, if an investor was to buy the stock at the going market price in order to collect the dividend, there is greater downside because the stock would have to lose 18.83% to reach the $35 strike price.

Always important when discussing dividends is the fact that, in general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Zions Bancorporation, looking at the dividend history chart for ZION below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 0.8% annualized dividend yield.

Below is a chart showing the trailing twelve month trading history for Zions Bancorporation, and highlighting in green where the $35 strike is located relative to that history:

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 2019 put at the $35 strike for the 3.7% annualized rate of return represents good reward for the risks. We calculate the trailing twelve month volatility for Zions Bancorporation (considering the last 252 trading day closing values as well as today's price of $43.12) to be 29%. For other put options contract ideas at the various different available expirations, visit the ZION Stock Options page of StockOptionsChannel.com.

« Back

Seven Options Myths Debunked
Today's Most Active Call & Put Options of the S&P 500
Binary Options Explained
Top YieldBoost PUTS of the Dow Components
Top YieldBoost CALLS of the Dow Components
Top YieldBoost PUTS of the S&P 500 Components
Top YieldBoost CALLS of the S&P 500 Components
Top YieldBoost PUTS of the Nasdaq 100 Components
Top YieldBoost CALLS of the Nasdaq 100 Components
Top YieldBoost PUTS: Master Limited Partnerships (MLPS)
Top YieldBoost CALLS of the MLPs
Top YieldBoost PUTS: Business Development Companies (BDCs)
Top YieldBoost CALLS of the BDCs
Top YieldBoost PUTS: Real Estate Investment Trusts (REITs)
Top YieldBoost CALLS of the REITs
Top YieldBoost PUTS of the Mortgage REITs
Top YieldBoost CALLS of the Mortgage REITs
Top YieldBoost PUTS of S.A.F.E. Dividend Stocks
Top YieldBoost CALLS of S.A.F.E. Dividend Stocks
Top YieldBoost PUTS of Stocks with Insider Buying
Top YieldBoost CALLS of Stocks with Insider Buying
Top YieldBoost PUTS of Stocks Analysts Like
Top YieldBoost CALLS of Stocks Analysts Like
Top YieldBoost PUTS of Stocks Conducting Buybacks
Top YieldBoost CALLS of Stocks Conducting Buybacks
Top YieldBoost PUTS of Stocks with Recent Secondaries
Top YieldBoost CALLS of Stocks with Recent Secondaries
Top Ten Highest Yielding Preferred Stocks
Dividend Channel's 25 S.A.F.E. Dividend Stocks
Increasing Payments For Decades

10 Cheap Dividend Stocks Under $10
10 Low Priced Dividend Stocks Under $5
Safer than S.A.F.E: Preferreds of Dividend Channel's
S.A.F.E. Dividend Stocks

Top 25 Broker Analyst Picks of the S&P 500
Stock market game

Commit To Buy Zions Bancorporation At $35, Earn 5.9% Using Options | www.StockOptionsChannel.com | Copyright © 2012 - 2018, All Rights Reserved

Nothing in Stock Options Channel is intended to be investment advice, nor does it represent the opinion of, counsel from, or recommendations by BNK Invest Inc. or any of its affiliates, subsidiaries or partners. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All viewers agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. By visiting, using or viewing this site, you agree to the following Full Disclaimer & Terms of Use and Privacy Policy. Video widget and market videos powered by Market News Video. Quote and option data delayed at least 15 minutes; stock quote data powered by Ticker Technologies, and Mergent. Contact Stock Options Channel; Meet Our Editorial Staff.