New Options for Urban Outfitters Offer Strategic Opportunities

Investors in Urban Outfitters, Inc. (Symbol: URBN) encountered new options this week, specifically for the December 19th expiration. Given that there are 241 days until this expiration, these new contracts provide potential for higher premiums when compared to those expiring sooner due to the significance of time value. At Stock Options Channel, our YieldBoost formula has scrutinized the URBN options chain and identified notable put and call contracts.

Put Option Analysis at $47.00 Strike Price

The put contract at the $47.00 strike price currently has a bid of $6.50. An investor selling-to-open this put contract would agree to purchase shares of URBN at $47.00 while also collecting the premium. This action effectively reduces the cost basis of the shares to $40.50 (excluding broker commissions). For those already interested in buying URBN shares, this alternative could be more appealing than the current market price of $48.75 per share.

Since the $47.00 strike price represents a roughly 4% discount to the current trading price, it is considered out-of-the-money by that percentage. Current analytical data suggests a 63% probability that the put contract may expire worthless. Stock Options Channel will monitor these odds, with ongoing updates available on our website under the contract detail page. If the contract does expire worthless, the collected premium translates to a return of 13.83% on the cash commitment, or 20.94% on an annualized basis, a figure we refer to as the YieldBoost.

Below is a chart reflecting the trailing twelve-month trading history for Urban Outfitters, Inc., with the $47.00 strike highlighted in green:

Call Option Analysis at $50.00 Strike Price

Examining the call options, the contract at the $50.00 strike price has a bid of $7.30. If an investor were to buy URBN shares at the current price of $48.75 per share and then sell-to-open this call contract as a covered call, they would be agreeing to sell the stock at $50.00. Accounting for the premium received, this strategy would yield a total return of 17.54%, assuming the stock is called away by the December 19th expiration (before broker commissions). However, potential significant upside might remain if URBN shares increase considerably, reinforcing the need to evaluate both the trailing trading history and company fundamentals.

Displayed below is a chart showing URBN’s twelve-month trading history, with the $50.00 strike highlighted in red:

Given that the $50.00 strike price is approximately a 3% premium to the current trading price, there is a chance that this covered call contract may expire worthless. In such a scenario, the investor retains their shares and the premium collected. Current analytics indicate a 43% probability of this outcome. Tracking these odds will also be part of Stock Options Channel’s ongoing assessments, with updated charts featured on our website. Should the call contract expire worthless, the premium received would represent a 14.97% increase in return on investment, or 22.68% on an annualized basis—the additional return we designate as the YieldBoost.

The implied volatility for the put contract stands at 56%, while the call contract has an implied volatility of 53%. In comparison, our calculations reveal the actual trailing twelve-month volatility—based on the last 250 days of trading data and incorporating today’s price of $48.75—to be 51%. For further insights into additional put and call options worth considering, please visit StockOptionsChannel.com.

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also see:

• Institutional Holders of SOFO
• SSYS Options Chain
• CXT Average Annual Return

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.