Grasping the New Opportunities
Investors in Ionq Inc (Symbol: IONQ) witnessed the unveiling of fresh options this week, tailored for the October 18th expiration. A crucial determinant influencing the price an option buyer finds palatable is the element of time. Consequently, with 238 days until expiration, these novel contracts present a potential opening for put or call sellers to secure a premium higher than what closer-expiry contracts could offer in the pricers.
Exploring the Potential
At Stock Options Channel, our proprietary YieldBoost algorithm meticulously combed through the IONQ options spectrum for the latest October 18th contracts and pinpointed a put and call contract worthy of attention. The put contract at the $10.00 strike price currently boasts a bid of $2.02. Should an investor opt for selling-to-open that put contract, they are essentially agreeing to acquire the stock at $10.00 – however, they would also pocket the premium, driving down the share’s cost basis to an inviting $7.98 (prior to broker commissions). For an investor eyeing IONQ shares, this could emerge as an enticing alternative to shelling out $10.81/share presently.
Deciphering the Odds
Given that the $10.00 strike equates to around a 7% markdown from the existing trading value of the stock (essentially placing it out-of-the-money by that percentage), there’s a likelihood that the put contract might expire without value. Current analytical data, incorporating greeks and implied greeks, indicates a 69% probability of that scenario materializing. Stock Options Channel will diligently monitor these probabilities over time to document the fluctuations, presenting a visual representation of these numbers on our portal’s contract particulars page. Should the contract close out fruitlessly, the premium would yield a 20.20% return on the cash commitment, or 30.98% annualized – a phenomenon we lovingly dub the “YieldBoost.”
Charting the Trajectory
Below is a comprehensive chart showcasing Ionq Inc’s year-long trading history and spotlighting where the $10.00 strike stands concerning that historical data:
Transitioning to the calls segment of the option chain, the call contract at the $12.50 strike price comes with a current bid of $1.87. An investor opting to procure IONQ shares at the prevalent price level of $10.81/share and subsequently embarking on selling-to-open that call contract – a move often deemed a “covered call” – is committing to vending the stock at $12.50. Factoring in the premium garnered, this strategy would culminate in a total return (excluding dividends, if any) of 32.93% upon potential call-away of the stock at the October 18th expiry (prior to broker commissions). Of course, if IONQ shares ascend significantly, a considerable upside could remain untapped. Hence, delving into Ionq Inc’s year-long trading history and dissecting the business fundamentals emerges as imperative. The chart below illustrates IONQ’s trailing twelve-month trading history with the $12.50 strike accentuated in red:
Considering that the $12.50 strike reflects an approximate 16% premium to the existing trading price of the stock (essentially placing it out-of-the-money by that margin), there’s a possibility that the covered call contract might wind up fruitless. Should this occur, the investor would retain both their stock holdings and the collected premium. The prevailing analytical data, encompassing greeks and implied greeks, suggest a 42% chance of this outcome crystallizing. Stock Options Channel is primed to monitor these probabilities over time, illustrating the shifts and presenting a chart of these figures (the option contract’s trading history will also be graphed). In the event of a futile expiration of the covered call contract, the premium would furnish a 17.30% enhancement in additional return to the investor, or 26.53% annualized – christened by us as the “YieldBoost.”
The implied volatility in the put contract display stands at 94%, while the call contract counterpart boasts a 96% implied volatility rate.
Simultaneously, we’ve computed the genuine trailing twelve-month volatility (factoring the last 251 trading day closing values along with today’s $10.81 price) to be 88%. For a treasure trove of put and call options contract ideas worth scrutinizing, pay a visit to StockOptionsChannel.com.
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Additional Insights:
LAD Dividend Growth Rate
Nordson market cap history
Institutional Holders of TNDQ
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
