New Options Trading Opportunities for BioMarin Investors
Investors in BioMarin Pharmaceutical Inc (Symbol: BMRN) have new options available starting this week, with an expiration date set for February 2025. Stock Options Channel’s YieldBoost formula has identified one notable put and one call contract from the February 2025 options chain.
Put Options: An Attractive Buying Alternative
The put contract at the $57.50 strike price has a current bid of 5 cents. Selling-to-open this put contract would mean agreeing to buy the stock at $57.50 while collecting the premium. This results in a cost basis of $57.45 for the shares, assuming no broker commissions. For investors interested in acquiring BMRN shares, this method could be a preferable option compared to the current price of $65.30 per share.
Since the $57.50 strike represents a roughly 12% discount to today’s trading price, there’s a possibility that this put contract could expire worthless. Current data indicates an 81% chance of this outcome. Stock Options Channel plans to monitor these odds over time, providing updates on their website. If the contract does expire worthless, the premium income would equate to a 0.09% return on the cash commitment, or an annualized 0.53% — a measure we call the YieldBoost.
Below is a chart illustrating BioMarin Pharmaceutical Inc’s trading history over the past twelve months, highlighting the position of the $57.50 strike price:
Call Options: Potential for Returns on Current Investments
On the call side, a contract at the $67.50 strike price is currently bid at 70 cents. If an investor purchases BMRN stock at the current rate of $65.30 per share and sells-to-open this call contract, they commit to sell the stock at $67.50. Including the premium would result in a total return, not counting dividends, of 4.44% if the stock is bought at the February 2025 expiration. However, strong price increases could mean missing out on potential additional gains, making it essential to review both historical pricing and business fundamentals.
Below is a chart showing BMRN’s trading history during the past year, emphasizing the $67.50 strike price:
The $67.50 strike essentially holds a 3% premium compared to the current trading price, meaning there’s a chance the call contract also may not be exercised, allowing the investor to retain both shares and premium. Current estimates show a 55% likelihood that the call contract could expire worthless. Stock Options Channel will track these figures and document changes on their website. If the covered call expires worthless, the premium would add a 1.07% return, or 6.52% annualized — which we also term a YieldBoost.
The implied volatility for the put contract stands at 40%, whereas the call contract’s implied volatility is 33%. In comparison, the actual trailing twelve-month volatility, based on the last 250 trading days and the present price of $65.30, is calculated at 32%. For a deeper exploration of put and call options, visit StockOptionsChannel.com.
Explore Top YieldBoost Calls of the S&P 500 »
Additional Resources:
- Affordable Technology Stocks
- Funds Holding SNAL
- TMAT Options Chain
The views and opinions expressed herein represent those of the author and not Nasdaq, Inc.
