New Beginnings in Options Trading for OKTA
Investors involved with Okta Inc (Ticker Symbol: OKTA) have witnessed the unfolding of a fresh chapter this week in the realm of options trading. As of the first week of January 2025, new options have come into play for the January 2025 expiration. The value imbued into these options by potential buyers hinges significantly on the element of time. With 329 days left until expiration, these newly minted contracts offer a chance for put or call sellers to fetch a premium superior to what shorter-term contracts would deliver. At Stock Options Channel, our proprietary YieldBoost methodology combed through the OKTA options chain pertaining to these new January 2025 contracts. In doing so, we’ve pinpointed one put and one call contract that stand out as intriguing prospects.
The Allure of Put Contracts
Delving into specifics, a put contract positioned at the $75.00 strike price is currently garnering a bid of $9.75. Should an investor opt to sell-to-open this put contract, they are essentially making a commitment to acquire the stock at $75.00. However, in tandem, they will secure the premium involved, effectively setting the cost basis of the shares at $65.25 (discounting broker commissions). For an investor eyeing an OKTA investment, this presents an enticing avenue compared to the current $83.00/share going rate. The $75.00 strike evidences an attractive discount of approximately 10% from the prevailing stock price, signifying it is out-of-the-money by that threshold. Consequently, there’s the scenario where the put contract could expire as a nullity. Present statistical insights suggest a 71% probability of this outcome. Stock Options Channel will diligently monitor these probabilities over time, furnishing a graphical showcase of the data on our website. If the contract were to expire ineffectual, the premium would equate to a 13.00% return on the cash outlay, or a 14.42% annualized return — what we, at Stock Options Channel, dub the YieldBoost.
Visualizing the Future with Calls
Shifting focus to the calls side of the equation, a call contract stationed at the $95.00 strike price boasts a $12.30 bid at present. Opting to procure OKTA shares at the ongoing price level of $83.00/share, then proceeding to sell-to-open that call contract in a “covered call” maneuver, involves agreeing to vend the stock at $95.00. With the call seller set to pocket the premium, this transaction could advance a total return of 29.28% (barring dividends) if the stock is called away upon the January 2025 expiration (prior to broker commissions). However, a substantial upside could remain unexplored if OKTA shares witness a remarkable upsurge. Contextualizing this, examining OKTA Inc’s twelve-month trading performance and delving into its business fundamentals emerges as critical. A chart delineates OKTA’s twelve-month trading history, with the $95.00 strike outlined in red.
Deconstructing the Odds
Considering the $95.00 strike marking a roughly 14% premium to the present trading value of the stock, there’s the possibility that the covered call contract could end up worthless, leaving the investor with both their stock holdings and the premium accrued. Current analytical data suggest a 47% likelihood of this occurrence. Stock Options Channel will meticulously chart these odds and observe their evolution over time on our website, alongside the trading history of the option contract. Were the covered call contract to falter, the premium would furnish a 14.82% supplemental return to the investor, or a 16.44% annualized yield — what we affectionately dub the YieldBoost.
The implied volatility stands at 55% for the put contract and 49% for the call contract. Meanwhile, the tangible trailing twelve-month volatility, considering the last 251 closing values along with the current price of $83.00, is gauged at 48%. For more insights on potential put and call options contracts worthy of consideration, feel free to peruse StockOptionsChannel.com.
Carrying the journey beyond numbers and metrics, let’s venture into unchartered territories where risk and reward intersect, beckoning astute investors to make calculated moves in a nuanced dance with market dynamics.
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Elegant musings on the yin and yang of options trading are solely the reflections of the author, disconnected from the realm of Nasdaq, Inc.
