On October 4, 2023, Braze Inc (Symbol: BRZE) introduced new options contracts with a December 2026 expiration. The newly traded put contract at a $25.00 strike price has a current bid of $3.00, allowing investors to purchase shares at an effective cost basis of $22.00. This represents a 1% discount to the current trading price of $25.28. The odds of this put contract expiring worthless are estimated at 67%, offering a potential 12.00% return on cash commitment, or 8.87% annualized.
Additionally, a call contract at the $27.50 strike price has a current bid of $4.00. Investors who buy shares at $25.28 and sell this call as a covered call would realize a total return of 24.60% if the stock gets called away at expiration. The current odds of this contract expiring worthless are 38%, allowing the investor to retain shares and the premium, equating to a 15.82% boost in return, or 11.69% annualized.
The implied volatility for the put contract is 57%, while the call contract sees an implied volatility of 58%. The trailing twelve-month actual volatility is calculated to be 54%, based on the past 249 trading days and the current price.
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