January 2027 Options Present Strategic Choices for Investors
Investors in Biohaven Ltd (Symbol: BHVN) have new options to consider today, specifically with a January 2027 expiration date. With 791 days left until this expiration, these new contracts provide a significant opportunity for put or call sellers to potentially earn a higher premium than what shorter-term contracts might offer. Our YieldBoost formula at Stock Options Channel has highlighted one put and one call contract worth examining.
The put contract at the $45.00 strike price currently holds a bid of $11.50. If an investor chooses to sell-to-open this put contract, they agree to buy the stock at $45.00 while collecting the premium. This action effectively lowers their cost basis to $33.50 per share, excluding broker commissions. For those looking to invest in BHVN, this alternative may be more appealing than purchasing shares at the current market price of $46.37.
The $45.00 strike is roughly 3% below the stock’s current trading price, implying it is out-of-the-money by that margin. There exists a considerable chance that this put option may expire worthless, with analytical data suggesting a 75% probability. Over time, Stock Options Channel will continue to monitor these odds, updating the figures regularly on our website’s contract detail page. If the contract indeed expires worthless, the premium would yield a 25.56% return on the cash commitment, translating to an annualized return of 11.79% — a strategy we refer to as YieldBoost.
Below is a chart illustrating the last twelve months of Biohaven Ltd’s trading history, with the $45.00 strike price pointed out in green:
Turning our attention to the call side, the call contract at the $60.00 strike price offers a bid of $13.00. If an investor buys shares of BHVN at the current price of $46.37 and subsequently sells-to-open this call as a covered call, they would be agreeing to sell the stock at $60.00. By factoring in the premium received, this strategy could yield a total return of 57.43% if the stock is called away at the January 2027 expiration, not accounting for any potential dividends or broker commissions. However, if the company enjoys substantial growth, there might be significant upside left untapped. Thus, analyzing Biohaven Ltd’s trading history and business fundamentals is essential.
Here is the chart displaying BHVN’s trading activity over the past twelve months, highlighting the $60.00 strike price in red:
As the $60.00 strike stands approximately 29% above the current stock price, it is also possible for this covered call to expire worthless. In such a case, the investor retains both the shares and the premium. Current data suggests a 37% likelihood of this occurring. Stock Options Channel will continually track these figures, updating their status on our website. Should this contract expire worthless, the premium collected would provide an additional return of 28.04%, yielding an annualized return of 12.94%, also referred to as YieldBoost.
For the put contract example, the implied volatility is set at 69%, while the call contract shows an implied volatility of 64%. In comparison, the actual trailing twelve-month volatility—calculated over the last 251 closing days—is 59%. For additional insights into both put and call contract strategies, feel free to visit StockOptionsChannel.com.
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Also see:
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
