Today marks the commencement of trading for fresh options on Affirm Holdings Inc (Symbol: AFRM), earmarked to expire on October 18th. The lure of these novel contracts lies in their time value, with 198 days left till expiration, potentially empowering put or call sellers to reap a premium surpassing that available with nearer expiry contracts.
Stock Options Channel has delved into the AFRM options chain for the impending October 18th contracts and pin-pointed one put and one call contract of notable intrigue. Intriguingly, the put contract stationed at the $30.00 strike price boasts a $5.95 bid. Selling-to-open this put contract necessitates a commitment to buy the stock at $30.00, yet it also entails capturing the premium, effectively pegging the cost basis of the shares at a lucrative $24.05, pre-broker commissions. For an investor already eyeing AFRM shares, this avenue could emerge as an alluring alternative to the current $34.30/share price.
Presenting an approximately 13% discount to the present trading price of the stock, the $30.00 strike stands out as an out-of-the-money option. Correspondingly, there’s a 71% shot, per existing analytical data, that the put contract could expire futile. Stock Options Channel is poised to monitor these odds continuously, envisaging a possible chart display of these figures on their website. On a worthless expiration, the premium could potentially yield a 19.83% return on the cash commitment – or 36.56% annualized – coined aptly as the YieldBoost.
Feast your eyes on the trailing twelve-month trading legacy of Affirm Holdings Inc, which shines a spotlight on the $30.00 strike’s positioning throughout this timeframe. Meanwhile, on the calls end of the option chain, the call contract at the $37.50 strike now flaunts a $7.70 bid. Opting to wrestle with this call contract after purchasing AFRM shares at the current $34.30/share, exposes a “covered call” strategy, promising to offload the stock at $37.50. If and when the stock gets called away at the October 18th expiration, the call seller could savor a total return of 31.78% (minus dividends, if any) – don’t overlook broker commissions. Yet, bearing in mind the potential upside if AFRM shares skyrocket, viewing the trailing twelve-month trading journey of Affirm Holdings Inc becomes pivotal. Witness this journey through a resonant chart displaying AFRM’s history, with the $37.50 strike accentuated in vivid red.
As the $37.50 strike heralds an approximate 9% premium to the ongoing trading price of the stock, it qualifies as an out-of-the-money entity by this percentage metric. Pertinently, there’s a 41% probability, as per current analytical data, that the covered call contract could meet a worthless fate. Espying these odds fluctuate over time will prove imperative, with Stock Options Channel envisioning periodic chart publications to chart this contract’s history. A wasted expiration would gift the investor with both their stock shares and the rupees bagged as premium. This windfall could potentially offer a 22.45% enhancement in extra return for the investor – or a 41.38% annualized perk, affectionately tagged the YieldBoost.
The implied volatility for both the put and call contracts tentatively settles around 91%. A deeper dive unveils the actual trailing twelve-month volatility to stand at 86%, considering the last 250 trading days’ closing values (alongside today’s price of $34.30). For further put and call options vistas worth exploring, a rendezvous with StockOptionsChannel.com beckons.
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The viewpoints and musings encapsulated herein reflect the standpoint of the author and are not necessarily an echo of Nasdaq, Inc.’s perspective.
