Exploring Profit Amid Market Flux
Investors considering purchasing shares of Marketaxess Holdings Inc (Symbol: MKTX) might find solace from the prevailing market price of $212.82/share by contemplating the option of selling puts. Specifically, the March put at the $210 strike presents an intriguing opportunity, with a bid of $3.80 at present. Opting to collect this bid as premium equates to a 1.8% return against the $210 commitment, offering an attractive 44.1% annualized rate of return, a strategy Stock Options Channel fondly dubs YieldBoost.
Skilful Strategy in Option Trading
When one sells a put, it differs from owning shares because the put seller only acquires stock if the contract is exercised. The counterparty to the contract would exercise it at the $210 strike solely if it yields a superior outcome compared to selling at the current market price. Therefore, unless Marketaxess Holdings Inc experiences a 1.2% decline and the contract is executed, the sole benefit to the put seller is in securing the premium for the 44.1% annualized rate of return.
The Dividend Temptation
Interestingly, the annualized 44.1% figure surpasses the 1.4% annualized dividend of Marketaxess Holdings Inc by a striking 42.7%, given the prevailing share price of $212.82. However, purchasing stock at market price for dividend collection presents more substantial downside, requiring a 1.19% decrease to reach the $210 strike price.
Deciphering Dividend Dynamics
In discussions about dividends, it’s crucial to note that dividend amounts often fluctuate with a company’s profitability trends. Examining the dividend history chart for MKTX can provide insights into whether the current dividend pattern will persist, thereby gauging the likelihood of a 1.4% annualized dividend yield.
A Vision into Market Performance
The trading history chart for Marketaxess Holdings Inc over the trailing twelve months underscores where the $210 strike stands concerning historical trends. This visualization, coupled with historical volatility and fundamental analysis, aids in evaluating whether selling the March put at the $210 strike for a 44.1% annualized return aligns with the risk-reward balance. As the trailing twelve months’ volatility for Marketaxess Holdings Inc stands at 39%, this option strategy beckons as a lucrative proposition.
