Investors in Alphabet Inc. (GOOGL) have access to new options expiring on May 13th, including a noteworthy put contract at the $345.00 strike price, which currently has a bid of $8.10. Selling this contract commits an investor to buy GOOGL shares at $345.00, effectively reducing the cost basis to $336.90. This price represents a roughly 2% discount compared to the current trading price of $350.42, with a 57% chance that the put could expire worthless.
On the call side, a $400.00 strike price call contract has a bid of $1.22. If an investor purchases GOOGL shares at $350.42 and sells this covered call, it could yield a total return of 14.50% upon expiration, assuming the stock is called away. The call option is 14% out-of-the-money, with an 89% likelihood of expiring worthless, providing an additional 0.35% yield to the investor if it does not get exercised. Implied volatility for the put is at 42%, while the call’s is at 53%.
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