Traders had their eyes fixed on the horizon this week as new options emerged for Iovance Biotherapeutics Inc (Symbol: IOVA) set to expire on April 19th. Stock Options Channel dissected the IOVA options landscape and pinpointed a put and a call contract with intriguing potential.
Potential Put Opportunity
A put contract at the $6.00 strike price is stirring interest, luring investors with a current bid of 55 cents. By selling-to-open this put contract, investors commit to seizing the stock at $6.00, while pocketing the premium, effectively reducing the cost basis of the shares to $5.45 (before broker commissions). For investors eyeing an entrance into IOVA, this could prove to be an enticing alternative to the current market price of $9.59/share.
If the share value plunges beneath the $6.00 mark, the put contract could end up expiring worthless, with current data pegging the odds of this at 93%. Stock Options Channel will monitor these odds over time and publish a detailed chart on their website. Should the contract expire without value, the premium would yield a 9.17% return on the cash invested or 53.14% annually – a concept Stock Options Channel refers to as the YieldBoost.
Take on Calls
On the calls side, a call contract at the $12.00 strike price is making waves with a current bid of $1.15. Investing in IOVA at the current price of $9.59/share and then selling-to-open this call contract as a “covered call” means committing to vend the stock at $12.00. If the stock gets called away at the April 19th expiration, this would yield a total return of 37.12% (excluding dividends, if any) before broker commissions. Nevertheless, such a move could leave ample potential upside on the table if IOVA shares surge.
If opting into this deal, one should closely scrutinize IOVA’s trailing twelve-month trading history and business fundamentals. The $12.00 strike is currently at a premium of about 25% to the prevailing trading price, indicating the potential for the covered call contract to expire worthless. The current odds of this are set at 67%, and Stock Options Channel will track and chart these numbers over time. If the covered call contract ends up worthlessly expiring, the premium would add a 11.99% extra return or 69.52% annually – what Stock Options Channel terms as the YieldBoost.
Risk and Volatility
The implied volatility in the put contract example stands at 224%, while the implied volatility in the call contract example is at an even more staggering 344%. Comparatively, the actual trailing twelve-month volatility is calculated at 86%. For a deeper dive into other put and call options worth exploring, investors can visit StockOptionsChannel.com.
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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.
