Investors Eye New Options Trading with Upstart Holdings
Investors in Upstart Holdings Inc (Symbol: UPST) can now explore new options that just began trading, set to expire on December 6th. Stock Options Channel has identified one put and one call contract that may be of interest to market participants.
Put Options Offer a Discounted Entry Point
The put contract at the $51.00 strike price currently has a bid of $4.95. If an investor sells this put contract, they agree to buy the stock for $51.00, while collecting the premium. Consequently, the effective purchase price for the shares would be $46.05 (excluding broker fees). For someone looking to buy shares of UPST, this option could be a more attractive choice compared to the current share price of $52.72.
This $51.00 strike price represents about a 3% discount to the current trading price, meaning it is out-of-the-money by that amount. The analytical data indicates there’s a 62% chance that this put contract may expire worthless. Stock Options Channel will track and update these odds over time, publishing a detailed chart. If the contract does expire without value, the premium collected would symbolize a 9.71% return on the cash commitment, or an impressive 82.31% annualized — referred to as YieldBoost.
Call Options Present Potential Returns
On the other side of the options chain, a $55.00 call contract has a current bid of $5.65. An investor who purchases UPST shares at the current price of $52.72 and sells this call contract as a “covered call” is agreeing to sell the stock at $55.00. Together with the premium received, this could yield a total return of 15.04% if the stock is called away on December 6th (before broker commissions). However, should UPST shares rise significantly, some potential profit might be missed, underscoring the importance of analyzing historical trading data and business fundamentals.
The following chart illustrates UPST’s trailing twelve-month trading history, highlighting the $55.00 strike price:
Notably, the $55.00 strike price is approximately 4% above the current stock price, another out-of-the-money scenario. There’s a 47% chance that this call could also expire worthless, allowing the investor to retain both the shares and the premium earned. Stock Options Channel will monitor these odds, also providing a detailed trading history for the option contract. If the covered call expires worthless, the premium would result in an additional return boost of 10.72%, or 90.88% annualized, classified as YieldBoost.
Volatility Insights
The implied volatility for the put contract is at 95%, while the call contract has an implied volatility of 103%. Meanwhile, the actual trailing twelve-month volatility, calculated from the last 251 trading day closing values and the current price of $52.72, is 93%. For more ideas on put and call options, visit StockOptionsChannel.com.
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Also see:
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
