As of this week, investors eyeing Proshares Ultrapro Short QQQ (SQQQ) have been presented with newly available options for the April 19th expiration. Stock Options Channel has employed its YieldBoost formula, meticulously surveying the SQQQ options chain for the latest April 19th contracts and has identified one put and one call contract deserving of special consideration.

The Put Contract: A Strategic Dive into Potential Returns

Zeroing in on the put contract at the $11.00 strike price reveals a current bid of 73 cents. By opting to sell-to-open this put contract, an investor is committing to buy the stock at $11.00, while simultaneously gaining the premium. Effectively, this puts the cost basis of the shares at $10.27 (pre-broker commissions). For an investor inclined towards purchasing SQQQ shares, this could stand as an appealing alternative to the present $11.53/share price tag.

The $11.00 strike represents an approximate 5% markdown to the current trading price of the stock, positioning it as out-of-the-money by that proportion. This affords the possibility that the put contract will expire worthless. With the current analytical data suggesting a 62% likelihood of this occurrence, Stock Options Channel will closely monitor these odds over time, publishing a chart of those figures on their website under the contract detail page for this contract. Should the contract indeed expire worthless, the premium would denote a 6.64% return on the cash commitment or a 38.47% annualized return – referred to by Stock Options Channel as the YieldBoost.

Visualizing Historical Context: Trailing Twelve-Month Trading History

An accompanying chart displays the trailing twelve-month trading history for Proshares Ultrapro Short QQQ, pinpointing in green where the $11.00 strike is located relative to that history. Such visual context serves to enrich the prospective assessment for investors.

The Call Contract: A Potential Avenue for Enhanced Returns

On the calls side of the option chain, a call contract at the $12.00 strike price currently commands a bid of 79 cents. If an investor chooses to purchase SQQQ shares at the current price level of $11.53/share and then sell-to-open the call contract as a “covered call,” they are committing to sell the stock at $12.00. Accumulating the premium, this would drive a total return of 10.93% if the stock is called away at the April 19th expiration – before broker commissions. With the potential for substantial upside if SQQQ shares surge, comprehending the trailing twelve-month trading history for Proshares Ultrapro Short QQQ and scrutinizing the business fundamentals becomes pivotal. A distinct chart encapsulates the trailing twelve-month trading history for SQQQ, with the $12.00 strike highlighted in red.

The $12.00 strike equates to an approximate 4% premium to the current trading price of the stock, signifying its out-of-the-money status by that degree. This sets the stage for the possibility of the covered call contract expiring worthless, in which case the investor retains both their shares of stock and the collected premium. The current analytical data suggests a 55% chance of this occurrence. Stock Options Channel will diligently track these odds over time, drawing up a chart of those numbers and the trading history of the option contract. If the covered call contract indeed expires worthless, the premium would serve as a 6.85% boost of additional return to the investor or a 39.72% annualized yield – termed by Stock Options Channel as the YieldBoost.

Assessing Implied and Actual Volatility

The implied volatility in the put contract example stands at 60% while the implied volatility in the call contract example registers at 51%. As for the actual trailing twelve-month volatility, considering the last 251 trading day closing values along with today’s price of $11.53, it measures at 49%. For further put and call options contract concepts worth considering, a visit to StockOptionsChannel.com is recommended.

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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.