Exploring New Opportunities
Investors had the chance to delve into fresh options this week for the May 10th expiration concerning Riot Platforms Inc (Symbol: RIOT). Stock Options Channel utilized its YieldBoost formula to scrutinize the options chain for the latest contracts, pinpointing one put and one call contract that piqued interest.
Put Contracts Unveiled
A put contract at the $10.50 strike price displayed a current bid of $1.02. If investors opt to sell-to-open this put contract, they agree to acquire the stock at $10.50, albeit collecting the premium as well—effectively setting the cost basis of the shares at $9.48 (before broker commissions). For those keen on acquiring RIOT shares, this maneuver may offer an enticing alternative to the current $10.71/share valuation.
Is the $10.50 strike a value-laden gate or a mirage? Only time holds the answer. As the put contract stands out-of-the-money by 2%, a journey into the realm of “worthless expiry” bears a 68% likelihood. Could this be a prudent gamble, or merely a fleeting dalliance?
Call Contracts on the Horizon
On the calls side, the call contract at the $13.00 strike price flaunted a $1.06 bid. By purchasing RIOT shares at the current value of $10.71/share and subsequently selling-to-open the call contract as a “covered call,” investors commit to selling the stock at $13.00. This strategic play, combined with premium collection, could yield a 31.28% return if the stock gets called away at the May 10th expiration—excluding dividends. However, astute investors must ponder—will soaring RIOT shares render this move overly conservative?
The $13.00 strike beckons, holding a 21% premium to the current stock price. Yet, as an out-of-the-money entity by that percentage, the covered call contract could fizzle into oblivion. With a 55% chance of expiry without value, the investor might secure not just shares but also the collected premium, posing a tantalizing scenario.
Volatility Insights
Notching up the excitement, the implied volatility stood tall at 110% for put contracts and 111% for call contracts. Contrastingly, the trailing twelve-month volatility, factoring in the closing values of the past 250 trading days along with the present $10.71 price, settled at 94%. For a deeper dive into potential put and call options contract options, a visit to StockOptionsChannel.com beckons.
Also see:
Cheap Industrials Shares
ARR Options Chain
RMCF market cap history
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
