New Options Trading Opportunities Open for CarGurus Investors

Investors in CarGurus Inc (Symbol: CARG) can now engage with fresh options that started trading today, with a March 2025 expiration date. A vital influence on an option’s price is its time value; with 105 days remaining until expiration, the new contracts may allow sellers of puts or calls to obtain a better premium compared to shorter-term contracts. At Stock Options Channel, we’ve analyzed the CARG options chain and spotlighted one notable put and one call contract.

Exploring the $36.00 Put Contract

The put contract with a $36.00 strike price has a current bid of 55 cents. Should an investor decide to sell this put contract, they agree to buy shares at $36.00 but will collect a premium, reducing their effective cost basis to $35.45 (excluding broker fees). This option may appeal to investors interested in acquiring CARG shares without paying the current price of $38.73 per share.

This $36.00 strike price represents about a 7% markdown from the current stock price, classifying it as out-of-the-money by that proportion. Analytical data indicates a 67% chance that the put contract may expire worthless. Stock Options Channel will monitor these odds over time and include them on our contract detail page. If the contract does expire without value, the premium would yield a 1.53% return on the cash commitment, or an annualized return of 5.31% — what we term a YieldBoost.

Visualizing CARG’s Trading History

The chart below displays the trailing twelve months of trading for CarGurus Inc, with the $36.00 strike point marked in green:

Analyzing the $40.00 Call Contract

On the calls side, the $40.00 strike price currently has a bid of 75 cents. If an investor buys shares of CARG at the ongoing price of $38.73 and simultaneously sells this call as a “covered call,” they obligate themselves to sell the stock for $40.00. Including the premium they receive, this could result in a total return of 5.22% if the stock is called away by the March 2025 expiration (again, before any broker fees). However, significant potential upside could remain if CARG shares appreciate substantially. Therefore, analyzing the historical trading for CarGurus and its underlying business fundamentals is crucial. The next chart illustrates CARG’s trading history, highlighting the $40.00 strike in red:

The $40.00 strike represents about a 3% premium over the current share price, making it out-of-the-money by that figure. Consequently, there’s a possibility that the covered call will expire worthless, allowing the investor to maintain both their shares and the collected premium. The analytical data suggest a 51% likelihood of this outcome. Over time, Stock Options Channel will also track these odds and visualize them on our website, along with a history of the option contract. If the covered call expires without value, the premium would equate to a 1.94% extra return, or an annualized 6.73%, also known as a YieldBoost.

The implied volatility for the put contract stands at 44%, while for the call contract, it’s at 41%. We also calculate the trailing twelve months of actual volatility (based on the last 251 trading days and today’s price of $38.73) to be 36%. For more insights into promising put and call options contracts, visit StockOptionsChannel.com.

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