Exploring New Opportunities
Investors tracking Alphabet Inc (Symbol: GOOG) recently gained access to new options slated to expire on November 15th. The extended time horizon of 273 days until expiration presents an intriguing prospect for sellers of puts or calls to potentially secure higher premiums compared to nearer expiry contracts. At Stock Options Channel, we have utilized the YieldBoost formula to scour the GOOG options chain for the latest November 15th contracts, singling out one put and one call contract that piqued our interest.
Compelling Put and Call Options
An available put contract at the $140.00 strike price currently holds a bid of $8.20. By selling-to-open this put contract, an investor commits to purchasing the stock at $140.00, while also pocketing the premium. This move lowers the cost basis of the shares to $131.80 (excluding broker commissions). For an investor eyeing GOOG shares, this could offer an enticing alternative to the current price of $142.75/share.
With the $140.00 strike reflecting an approximately 2% discount to the current trading price (i.e., out-of-the-money by that percentage), there remains the possibility of the put contract expiring worthless. Analytical data indicates a 99% chance of this outcome. We will monitor these odds over time and present the data on our website to gauge any fluctuations. If the contract expires worthless, the premium would deliver a 5.86% return on the cash commitment, equivalent to 7.83% annually – what we at Stock Options Channel term as the YieldBoost.
As for the calls side, the call contract at the $150.00 strike price bears a bid of $10.90. If an investor purchases GOOG shares at the current price and subsequently executes a “covered call” by selling-to-open the call contract, they voluntarily agree to sell the stock at $150.00. Factoring in the premium, this would amount to a total return (excluding dividends, if any) of 12.71% should the stock be called away at the November 15th expiration, before broker commissions. Nonetheless, substantial upside potential may remain unexploited if GOOG shares experience a substantial surge. Hence, examining the trailing twelve month trading history for Alphabet Inc and delving into the business fundamentals becomes pivotal.
Considering that the $150.00 strike represents an approximate 5% premium to the current trading price of the stock (i.e., out-of-the-money by that percentage), there is a likelihood of the covered call contract expiring worthless. Current analytical data signals a 99% chance of this occurrence. We will closely monitor and chart these odds on our website under the contract detail page. In the event of the covered call contract expiring worthless, the premium would provide a 7.64% boost of extra return to the investor, or 10.21% annualized – referred to as the YieldBoost.
Furthermore, the actual trailing twelve month volatility, considering the last 251 trading day closing values along with today’s price of $142.75, stands at 28%. For more put and call options contract ideas worth exploring, we encourage visiting 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.
