New Opportunities with July 19th Options Trading
At the dawn of a new trading period, Amazon.com Inc investors witnessed the unveiling of fresh options for the July 19th expiration. A crucial factor shaping the price of options is the time value. With 102 days until expiration, these newly minted contracts present a tantalizing prospect for put or call sellers to reap a richer premium compared to nearer expiration contracts. Stock Options Channel delves into the AMZN options chain, identifying a put and call contract with promising potential.
Uncovering Potential Opportunites
The put contract at the $185.00 strike price sports a bid of $9.95. Opting to sell-to-open this put contract entails an agreement to buy the stock at $185.00, coupled with collecting the premium, effectively setting the cost basis of the shares at $175.05. For investors eyeing AMZN shares, this strategy offers an appealing alternative to the current market price of $186.09 per share.
Exploring Historical Patterns
Positioned approximately 1% below the stock’s current trading price, the $185.00 strike presents an out-of-the-money scenario. This brings into play the possibility of the put contract expiring worthless, with current data indicating a 59% chance of such an outcome. Stock Options Channel will closely monitor these odds over time, encapsulating them in a detailed chart on their webpage, highlighting the evolving nature of this contract.
Capitalizing on Upside Potential
Shifting gears to the call side of the option chain, the call contract at the $190.00 strike commands a bid of $11.40. By purchasing AMZN shares at the prevailing price of $186.09 and subsequently selling-to-open this call contract as a “covered call,” an investor commits to selling the stock at $190.00. The judicious collection of premium yields a potential return of 8.23% if the stock is called away at the July 19th expiration.
Calculating Probability and Returns
With the $190.00 strike offering a 2% premium above the current trading price, the covered call contract may also expire without value. Current data estimates the likelihood at 48%, with Stock Options Channel pledging to chart these odds meticulously on their platform. In the event of a worthless expiration, the premium translates into a 6.13% additional return, equating to a robust 21.92% annualized YieldBoost for the investor.
Evaluating Market Volatility
Implied volatility stands at 31% for the put contract and 30% for the call contract. In contrast, the actual trailing twelve-month volatility is calculated at 29%, factoring in the last 250 trading days closing values alongside the current price of $186.09. For further insights on potential put and call options contracts, a visit to StockOptionsChannel.com is recommended.
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