Unveiling Intriguing Trading Opportunities
As the trading bells toll and investors gear up for a potential thrill ride in the world of options, a fresh breeze of opportunity hovers around Advanced Micro Devices Inc (Symbol: AMD) with the dawn of the May 10th expiration. The stock options landscape is abuzz with activity, as the diligent team at Stock Options Channel delves into the mysterious fabric of the AMD options chain, unveiling a put and call option that piques interest.
The Allure of Put Options
Picture this scenario – a put contract beckons at the $180.00 strike price, boasting a current bid of $10.60. A brave investor, willing to embrace risk, can opt to sell-to-open this put contract, essentially committing to acquire the stock at $180.00 per share. However, the sweet twist lies in pocketing the premium, thereby anchoring the cost basis of the shares at $169.40 (prior to broker commissions). For the eager investor eyeing AMD shares, this could be an irresistible allure, a chance to secure the stock at a discount against the current market price of $182.41/share.
Consider the $180.00 strike – a mere 1% markdown from the prevailing trading price of the stock; ergo, it lies tantalizingly out-of-the-money by that fraction. This conjures a scenario where the put contract may flutter into oblivion, expiring worthless. Analyst data hint at a 59% likelihood of this occurrence. Stock Options Channel stands prepared to chart this narrative over time, tracking the odds as they morph, carving out visual tales on our website’s contract detail page. A scenario where the contract fades away to nothing spells out a 5.89% return on the invested cash, or an annualized 49.99% – a phenomenon we endearingly christen as YieldBoost.
Of Calls and Covered Calls
Now, shifting our gaze to the other end of the option spectrum brings us to the call contract stationed at the $187.50 strike price. This enchanting contract shimmers with a current bid of $11.60, inviting investors to dance with the stock of AMD. Picture an investor swooping in to clasp shares at the present $182.41/share and subsequently embarking on a ‘covered call’ journey by selling the call contract. This enthralling endeavor commits to selling the stock at $187.50, effectively nurturing a total return of 9.15% (sans dividends) should the stock get called away by the May 10th finale (pre-broker commissions). However, a tale of caution unfolds – a soaring AMD stock could leave substantial upside potential untapped, beckoning us to glance back at AMD’s twelve-month trading history, gently probing its business foundations for wisdom.
Behold the $187.50 strike – an enticing 3% premium to the existing trading price of the stock, thereby dancing on the edge of out-of-the-money territory by that margin. Here, the veil of possibility flutters, whispering a tale where the covered call contract fades into insignificance, expiring futile. Analyst metrics place the current likeliness of this scenario at 50%. Stock Options Channel faithfully follows this odyssey, capturing the fluctuating odds, sketching vibrant charts on our website, singing songs of the option contract’s trading history. In a utopia where the covered call withers away, the premium sprouts wings of a 6.36% bonus return to the investor, akin to a yearly 53.98% sight to behold – the grand YieldBoost in all its splendor.
Diving Into the Oceans of Volatility
The implied volatility in both the put and call contract examples shimmers around 52%. Meanwhile, the tangible twelve-month volatility tale, woven from the last 251 trading day closures alongside today’s price of $182.41, unfolds at a picturesque 47%. For a bouquet of put and call option ideas worthy of exploration, wander over to StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
