New Options Available for Mastercard Investors: Key Opportunities

Investors in Mastercard Inc (Symbol: MA) discovered new options today for the December 19th expiration. One important factor influencing option pricing is time value. With 255 days until expiration, these newly available contracts provide a potential opportunity for sellers of puts or calls to earn a higher premium compared to contracts expiring sooner. Our YieldBoost formula at Stock Options Channel has analyzed the MA options chain and identified one put and one call contract of particular interest.

Put Contract Analysis

The put contract with a $500.00 strike price is currently bidding at $38.25. If an investor decides to sell-to-open this put contract, they are agreeing to buy Mastercard shares at $500.00, while also collecting the premium. This brings the cost basis of the shares down to $461.75 (excluding broker commissions). For investors considering purchasing MA shares now priced at $503.28, this option could be a more appealing alternative.

As the $500.00 strike represents about a 1% discount to the current trading price, it is technically out-of-the-money by this percentage. There is a 60% probability that this put contract will expire worthless, based on the current analytical data including greeks and implied greeks. Stock Options Channel will monitor these odds over time, providing updates on our website’s contract detail page. Should the contract expire worthless, the premium would yield a 7.65% return on the cash commitment, or annualized, 10.95%—what we term the YieldBoost.

Historical Context

Below is a chart displaying the trailing twelve-month trading history for Mastercard Inc, with the $500.00 strike marked in green:

Call Contract Analysis

On the calls side of the option chain, a call contract at the $520.00 strike price currently bids at $42.30. If an investor buys MA shares at $503.28/share and sells-to-open this call contract as a covered call, they’re agreeing to sell the shares at $520.00. The inclusion of the premium would achieve a total return of 11.73%, assuming the stock is called away at expiration on December 19th (excluding broker commissions).

However, there is a chance of missing out on additional upside if MA shares appreciate significantly. Hence, reviewing the trailing twelve-month trading history and the company’s fundamentals is critical. The chart below shows MA’s trading history with the $520.00 strike highlighted in red:

The $520.00 strike price represents about a 3% premium to the current trading price, meaning it is also out-of-the-money by that percentage. There’s a 47% chance the covered call contract may expire worthless, allowing the investor to keep both their shares and the premium. Analytic data suggests this scenario may occur, and should it materialize, the premium would yield an 8.40% additional return to the investor, or annualized, 12.03%—again referred to as YieldBoost.

Volatility Insights

The implied volatility stands at 30% for the put contract and 29% for the call contract. Meanwhile, the actual trailing twelve-month volatility—considering the last 251 trading days and today’s price of $503.28—is calculated at 19%. For further options contract ideas worth exploring, 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.