New Options Insight for Monster Beverage Investors
December Contracts Offer Strategic Choices
Investors in Monster Beverage Corp (Symbol: MNST) have new options available today, set to expire on December 13th. Stock Options Channel conducted a thorough review of the MNST options chain and has pinpointed one put and one call contract that stands out.
The put contract at the $52.00 strike price has a current bid of 20 cents. An investor selling this put contract would agree to buy the stock at $52.00 while collecting the premium, effectively reducing the cost basis of the shares to $51.80 (before broker commissions). For those considering purchasing MNST shares, this strategy may be a compelling alternative to paying the current market price of $53.11 per share.
At a $52.00 strike price, there’s a roughly 2% discount compared to the current stock price, indicating that the option is currently out-of-the-money by that margin. The analysis suggests there is a 61% chance that this put contract could expire worthless. Stock Options Channel will monitor these odds and provide a chart detailing changes over time on their website. If the contract does expire worthless, the premium would translate to a 0.38% return on the cash commitment, equating to an annualized return of 3.26%, a figure we refer to as YieldBoost.
Below is a chart illustrating the past twelve months of trading history for Monster Beverage Corp, with the $52.00 strike marked in green:
Analyzing Call Options: A Potentially Profitable Move
Switching to call options, a contract at the $54.00 strike price currently has a bid of $1.10. If an investor buys MNST shares at the price of $53.11 and simultaneously sells the call contract as a “covered call,” they would be agreeing to sell the stock at $54.00. With the premium added, this would provide a total return of 3.75% (excluding any dividends) if the stock is called away at expiration on December 13th (before broker commissions). However, it’s important to note that potential further gains could be missed if MNST shares rise significantly. Thus, reviewing the past twelve months of trading data and the company’s economic fundamentals is essential.
Below is a chart depicting the trading history of MNST over the last twelve months, with the $54.00 strike indicated in red:
Since the $54.00 strike is approximately 2% above the current trading price, there’s also a chance that this covered call could expire worthless, allowing the investor to retain both the shares and the collected premium. Current data shows a 51% likelihood of this outcome. Stock Options Channel will keep track of these odds over time and display a corresponding chart on their site. If the covered call expires worthless, the premium would offer an additional return of 2.07%, annualized at 17.56%, again referred to as YieldBoost.
The implied volatility for the put contract stands at 31%, while the call contract shows an implied volatility of 39%. In contrast, the actual trailing twelve-month volatility based on the last 251 trading days and today’s price of $53.11 is calculated at 23%. For more insightful put and call options contract strategies, visit StockOptionsChannel.com.
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The views and opinions expressed herein are those of the author and do not necessarily represent those of Nasdaq, Inc.