Datadog Options Offer Strategic Investment Opportunities for Investors
Investors in Datadog Inc (Symbol: DDOG) have new options available for the June 27th expiration. Using our YieldBoost formula, we identified notable put and call contracts within the DDOG options chain.
Insights on the Put Contract
A put contract with a strike price of $107.00 is currently trading at a bid of $5.55. Selling to open this put contract commits the investor to buy shares at $107.00. However, by collecting the premium, the effective cost basis for the shares drops to $101.45, excluding broker commissions. For those already considering purchasing DDOG shares, this offers a more attractive entry point compared to the current trading price of $107.61 per share.
This $107.00 strike represents about a 1% discount to the stock’s current price, making it out-of-the-money by that percentage. There is a 56% chance that the put contract could expire worthless, based on current analytical data, including greeks and implied greeks. We will monitor and update these odds over time on our contract detail page. If the contract does expire worthless, the premium yields a 5.19% return on cash commitment, equivalent to an annualized rate of 37.86%.
Analysis of the Call Contract
On the call side, a contract at the $109.00 strike price is currently bid at $5.75. If an investor purchases DDOG shares at $107.61 and sells this call as a “covered call,” they agree to sell the stock at $109.00. With the collected premium, this could provide a total return of 6.64%, excluding dividends, if the stock is called away at the June 27th expiration.
However, should DDOG shares rise significantly, upside potential could be missed. Reviewing DDOG’s recent trading history is vital for understanding potential volatility and business fundamentals. The $109.00 strike also marks a 1% premium over the stock’s current price, meaning there is a 49% chance that this covered call could expire worthless, allowing the investor to retain both shares and the premium. Should this outcome occur, the premium equates to a 5.34% additional return, or 39.01% annualized.
Volatility Considerations
Both the put and call contract examples demonstrate an implied volatility of around 41%. Our calculations also indicate that the actual trailing twelve-month volatility, derived from the last 250 trading days including today’s price of $107.61, is 41%.
For additional ideas on other put and call options contracts, further resources are available.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
