Equinix Options Offer Investors Outlook on Long-Term Strategies

Investors in Equinix Inc (Symbol: EQIX) have new options contracts available today, set to expire on August 15. With 122 days until this expiration, these fresh contracts provide a chance for sellers of puts or calls to potentially capture higher premiums compared to contracts with a shorter time frame. At Stock Options Channel, our YieldBoost formula has analyzed the new EQIX options chain, spotlighting one put and one call contract of particular interest.

Put Contract Insights

The put contract at the $780.00 strike price currently has a bid of $51.10. By selling this put contract, an investor commits to buying the stock at $780.00 while also receiving a premium, which lowers the cost basis to $728.90 (excluding broker commissions). For an investor already inclined to acquire shares of EQIX, this could present a valuable alternative to purchasing at the current market price of $791.41 per share.

This $780.00 strike price sits approximately 1% below the present trading price, meaning it is out-of-the-money by that percentage. The analytical data, including the Greeks and implied volatility, suggests a 58% likelihood that the put contract may expire worthless. Stock Options Channel will monitor these odds over time and publish trends of these probabilities on our website under the contract detail page. If the contract does expire worthless, the premium received would yield a 6.55% return on the cash commitment or an annualized rate of 19.60%, which we refer to as the YieldBoost.

Below is a chart depicting the trailing twelve-month trading history for Equinix Inc, highlighting the position of the $780.00 strike in green:

Call Contract Overview

On the call side, the contract at the $800.00 strike price has a bid of $56.30. If an investor buys shares of EQIX at the current price of $791.41 per share and sells this call contract as a covered call, they would agree to sell the stock at $800.00. Including the premium collected, this setup could generate a total return of 8.20% if the stock is called away by the August 15 expiration (before broker commissions). However, significant upside could remain if EQIX shares rise substantially, emphasizing the importance of reviewing the company’s twelve-month trading history and its business fundamentals.

Here is a chart showing the trailing twelve-month trading history for EQIN, with the $800.00 strike marked in red:

The $800.00 strike price lies about 1% above the current trading price, indicating it is also out-of-the-money by that percentage. As a result, there is a risk that the covered call may expire worthless, allowing the investor to retain both their shares and the premium earned. Current data indicates a 47% chance of the contract expiring worthless. Stock Options Channel plans to track these probabilities over time and will provide updates on our website, including a history of the option contract. Should the covered call expire worthless, the premium would yield a 7.11% additional return or 21.28% annualized, also known as the YieldBoost.

The implied volatility for the put contract stands at 34%, while the call contract’s implied volatility is at 35%. In contrast, the actual trailing twelve-month volatility, based on the last 251 trading days in conjunction with today’s price of $791.41, is calculated to be 27%. For more options trading insights, visit StockOptionsChannel.com.

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