HomeMarket NewsOpportunities & Risks in ALKS November 15th Options Trading

Opportunities & Risks in ALKS November 15th Options Trading

Actionable Trade Ideas

always free

Exploring New Horizons with ALKS Options

This week marked the inception of new options for Alkermes plc (Symbol: ALKS) set to expire on November 15th. With 240 days remaining until expiration, traders have a chance to delve into these fresh contracts. The time value embedded within options plays a pivotal role in determining the premium investors are willing to pay. The distant November expiration offers sellers of puts or calls the prospect of obtaining a higher premium compared to nearer expiry contracts.

Stock Options Channel, known for its comprehensive YieldBoost formula, has scoured the ALKS options chain for potential opportunities. Among these novelties, an intriguing put and call contract stand out amidst the throng.

The Art of the Put Contract Dance

Enter the put contract at the $27.00 strike price, boasting a current bid of $2.45. Should an investor opt to sell-to-open this put contract, they’re committing to buying the stock at $27.00. However, collecting the premium concurrently slices the cost basis of the shares to $24.55 (before broker commissions). For those eyeing ALKS shares, this could present a compelling alternative to the prevailing $27.36/share price.

This intriguing $27.00 strike sits approximately 1% below the present stock priceβ€”a tantalizing out-of-the-money proposition. Statistically, the odds of this put contract expiring worthless stand at 63%. Stock Options Channel vows to monitor these probabilities, contemplating a potential chart showcasing the fluctuations over time.

A theoretical scenario where the put contract fizzles out would yield a premium-imbued 9.07% return on the cash commitment, translating to a 13.80% annualized return, ingeniously labeled as the YieldBoost mechanism.

The Intricacies of the Call Contract Puzzle

On the calls side, the $29.00 strike call contract has piqued interest with a $2.80 bid. Positioned as a covered call, the investor purchasing ALKS shares at the existing $27.36/share rate and opting to sell-to-open the $29.00 strike call contract would agree to sell the stock at $29.00 upon expiry. Factoring in the premium, this could potentially trigger a compelling total return of 16.23% if the stock is called away post the November 15th deadline (pre-broker commissions).

The $29.00 strike, residing roughly 6% above the current stock price, dances on the out-of-the-money periphery. As such, there’s a 45% chance of the covered call contract going bust. Stock Options Channel is primed to scrutinize these odds meticulously, conceiving a probable graph depicting their oscillations over time.

In a hypothetical scenario where the covered call contract crumbles, the premium would furnish an additional 10.23% boost to the investorβ€”a 15.56% annualized bonus, christened the YieldBoost strategy.

Volatility Unveiled

Amidst the saga, the put contract showcases an implied volatility of 40%, while its call counterpart tips the scales at 42%. In the realm of reality, the actual trailing twelve-month volatility stands at 37%, incorporating the last 251 trading days’ closing prices along with the current $27.36 figure.

For further elucidation on enticing put and call options contract concepts, a visit to StockOptionsChannel.com could be enlightening.

nslideshowTop YieldBoost Calls of the S&P 500 Β»

Mining Deeper into ALKS Dynamics

Β• KRP shares outstanding history

Β• Funds Holding YGMZ

Β• DTST Historical Stock Prices

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

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.