New Options Opportunities Emerge for Ollie’s Bargain Outlet Investors

Investors in Ollie’s Bargain Outlet Holdings Inc (Symbol: OLLI) were greeted this week with new options trading for contracts expiring on March 21st. Stock Options Channel has analyzed the OLLI options chain and highlighted two specific contracts worth noting.

Exploring Put Contracts: A Potential Bargain at $105

A put contract with a $105.00 strike price has a current bid of $2.55. By selling this put contract, an investor would agree to buy the stock at $105.00 while collecting the premium, effectively lowering the purchase cost to $102.45 (excluding broker commissions). For anyone eyeing OLLI shares, this could be a more appealing choice compared to the current price of $114.44 per share.

Notably, the $105.00 strike price offers an approximate 8% discount to the stock’s current price, indicating that it is currently out-of-the-money by that percentage. Current analysis suggests there is a 74% chance that this contract could expire worthless. Stock Options Channel will monitor and publish updates on these odds. Should the contract expire worthless, the premium equates to a 2.43% return on the cash commitment, which annualizes to 18.11% — known as the YieldBoost.

Call Contracts: Selling for Potential Gains at $120

On the calls side, the contract at a $120.00 strike price presents a current bid of $3.30. If an investor purchases OLLI shares at the prevailing price of $114.44 and sells this call contract as a “covered call,” they would agree to sell the stock at $120.00. Including the premium collected, this could yield a total return of 7.74% if the stock is called away by the March expiration (not counting dividends or brokerage fees). However, there is potential risk of missing out on further gains if OLLI shares rise significantly.

The $120.00 strike price is approximately 5% above the current trading level, which means there is also a chance that this call contract could also expire worthless. If that happens, the investor retains both their stock and the premium collected. Current data indicate a 60% likelihood that this contract may not be exercised. Stock Options Channel will keep track of these odds over time as well. Should this happen, the premium would represent an additional return of 2.88%, or 21.50% annualized — another example of the YieldBoost.

Volatility Insights

The implied volatility for the put option is 39%, while the call option shows a slightly higher implied volatility of 41%. By contrast, the actual trailing twelve-month volatility, calculated from the last 250 trading days and today’s stock price of $114.44, stands at 39%. For additional options insights, options traders can explore more at StockOptionsChannel.com.

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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.