August 15th Options Now Available For Warrior Met Coal (HCC)

An analysis by Stock Options Channel highlights potential options strategies for Warrior Met Coal Inc (HCC). Selling a $45 put offers a discounted entry point with a potential 1.78% return if it expires worthless, while a covered call strategy at $50 could yield 8.20% if the stock is called away, with a 1.18% return if it expires worthless; implied volatilities for the put and call are 52% and 51%, respectively, compared to a trailing twelve-month volatility of 47%.

Analysis

The provided financial article details two specific options strategies for Warrior Met Coal Inc. (HCC), which is currently trading at $46.72 per share. The first strategy involves selling-to-open a put contract at the $45.00 strike price, with a current bid of 80 cents. This action commits the investor to potentially purchase HCC shares at $45.00, effectively lowering the cost basis to $44.20 per share before commissions, representing an attractive entry point for those interested in acquiring the stock below its current price. This $45.00 strike is approximately 4% out-of-the-money, and current analytics suggest a 63% probability of the put expiring worthless, which would result in a 1.78% return on the cash commitment, or an 11.19% annualized YieldBoost. The second strategy is a covered call, where an investor holding HCC shares could sell-to-open a call contract at the $50.00 strike price, with a current bid of 55 cents. If the stock is called away at the August 15th expiration, this strategy would yield a total return of 8.20% (excluding dividends and before commissions). The $50.00 strike is roughly 7% out-of-the-money, and there's a 58% assessed probability of this call expiring worthless, in which case the investor retains their shares and the premium, representing a 1.18% YieldBoost (7.41% annualized). Significantly, the implied volatility for the put option is 52% and for the call option is 51%, both of which are higher than HCC's trailing twelve-month actual volatility of 47%, indicating that option premiums are currently elevated relative to recent historical price movements.

Key Decisions for Investors

• Investors bullish on Warrior Met Coal Inc. (HCC) and seeking to acquire shares at a discount to the current $46.72 price might consider selling the $45.00 strike put, which offers a potential cost basis of $44.20 if assigned, or an 11.19% annualized return on cash if it expires worthless.
• Existing HCC shareholders aiming to generate income and willing to cap upside appreciation at $50.00 per share could evaluate selling the $50.00 strike covered call, targeting an 8.20% return if the stock is called away by August 15th, or a 7.41% annualized yield enhancement if it expires worthless.
• Given that current implied volatilities of 51-52% exceed the stock's 47% trailing twelve-month historical volatility, option selling strategies may offer enhanced premium income, but this also reflects market expectations for potentially greater price swings.
• Before implementing either options strategy, it is crucial to conduct thorough due diligence on HCC's business fundamentals and to monitor the changing probabilities of the options expiring in-the-money, as suggested by the analytical data.