Decoding the Opportunities:
Investors experienced a momentous occasion as Amazon.com Inc (Symbol: AMZN) introduced new options for trading today, focusing on the December 2026 expiration. With 990 days until expiration, options buyers delved into a realm where time value plays a crucial role. The newly minted contracts offer sellers of puts or calls a chance to seek a more lucrative premium compared to those with a closer expiration date.
Seizing the Momentum:
One intriguing aspect identified by Stock Options Channel through its YieldBoost formula is a put contract at the $170.00 strike price, currently commanding a bid of $22.75. Should an investor opt to sell-to-open this put contract, they would commit to acquiring the stock at $170.00. However, by collecting the premium, the cost basis for the shares settles at $147.25 (pre-broker commissions). For investors eyeing AMZN shares, this presents an enticing alternative to the prevailing $179.47/share price.
In an intriguing turn of events, the $170.00 strike reflects approximately a 5% discount from the current stock price, rendering the put contract out-of-the-money by that percentage. The data indicates a 73% likelihood that the put contract may expire worthless. As Stock Options Channel monitors these odds, a potential return of 13.38% on the cash commitment, or a 4.93% annualized return, could ensue – a phenomenon known as the “YieldBoost.”
Visualizing the Possibilities:
The trailing twelve-month trading history for Amazon.com Inc illustrates the landscape in which the $170.00 strike is situated, accentuating the dynamics between past performance and future prospects.
Exploring New Horizons:
On the calls side of the option chain, attention is drawn to a call contract at the $230.00 strike price, with a current bid standing at $27.00. In the scenario where an investor acquires AMZN shares at the prevailing price of $179.47/share, then opts to sell-to-open the call contract as a “covered call,” they commit to selling the stock at $230.00. This strategic move could yield a total return of 43.20% if the stock gets called away at the December 2026 expiration, providing a comprehensive outlook on potential gains.
With the $230.00 strike representing an approximate 28% premium to the current stock price, the covered call contract may also face an outcome where it expires worthless. Current data indicates a 48% chance of this occurrence. Should the covered call contract meet this fate, the investor retains both their shares and the premium collected, with the premium contributing an extra boost of 15.04% return or a 5.55% annualized return – a phenomenon known as “YieldBoost.”
Diving into the Metrics:
The implied volatility in the put contract is noted at 36%, while the call contract stands at 31%. In contrast, the actual trailing twelve-month volatility is calculated at 30%, reflecting the interplay between historical data and present-day stock prices. For further insights into put and call options contract ideas, a visit to StockOptionsChannel.com could be illuminating.
Top YieldBoost Calls of the Nasdaq 100 »
Also see:
Funds Holding APXH
INVZ shares outstanding history
BAMR Videos
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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