New Options Available for Microsoft Investors: Opportunities on December 13th
Investors in Microsoft Corporation (Symbol: MSFT) can now trade new options set to expire on December 13th. Stock Options Channel has identified key contracts within the MSFT options chain that may pique investor interest.
Put Contract Offers a Strategic Opportunity
The put contract at a strike price of $400.00 has a current bid of $8.55. By choosing to sell-to-open this put, an investor agrees to buy the stock at $400.00 while collecting the premium. This brings the effective cost of the shares down to $391.45, excluding broker commissions. For those considering purchasing MSFT shares, this presents an appealing alternative to the current trading price of $407.16.
The $400.00 strike is about a 2% discount from the current stock price, indicating it is slightly out-of-the-money. Analysis shows there is a 65% chance that this put contract may expire worthless. Stock Options Channel will monitor these odds, providing updates on their website as conditions change. If the contract does expire worthless, the premium received would yield a 2.14% return on the cash commitment, a projection of 18.13% annualized—something we term as YieldBoost.
Exploring the Call Side for Potential Gains
On the call side, the $420.00 strike price call contract boasts a current bid of $10.35. If an investor buys MSFT shares at the current price of $407.16 and sells this call as a “covered call,” they commit to selling their stock at $420.00. With the collected premium factored in, this strategy could provide a total return of 5.70%, provided the stock is called away at expiration (before any broker fees). However, potential gains could diminish if MSFT shares drastically increase, making it vital to analyze both past performance and the company’s fundamentals. Below is the chart highlighting the $420.00 strike in red against the twelve-month trading history.
The $420.00 strike represents approximately a 3% premium to the current stock price, indicating it too is out-of-the-money. There’s a 56% chance that this covered call could expire worthless, allowing the investor to retain both the shares and the premium. Stock Options Channel will also keep track of these odds over time. Should the covered call contract expire without being exercised, the premium would equate to a 2.54% increase in return, or an annualized 21.56%—again under the YieldBoost category.
Understanding Volatility Trends
The implied volatility for the put example is 27%, while the call’s implied volatility stands at 25%. Historical volatility, based on the last 251 trading days and the current price of $407.16, is calculated at 20%. For additional put and call options ideas, investigate more at StockOptionsChannel.com.
Top YieldBoost Calls of the Nasdaq 100 »
Also see:
- Holdings Channel
- OLLI shares outstanding history
- PODD MACD
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.