New Prospects for Investors
As Tower Semiconductor Ltd. (Symbol: TSEM) enthusiasts know, this week unveiled fresh options for the upcoming May 17th expiration. Stock Options Channel, a treasure trove of financial insights, has scoured the alleys of the TSEM options chain and unearthed a buried treasure – one put and one call contract deserving a second glance.
An Analogy in the Making
Imagine a savvy investor eyeing the put contract at the $31.00 strike price, with a tempting bid of $1.10. Should they decide to sell-to-open this contract, they are effectively agreeing to buy the stock at $31.00. However, they also stand to pocket the premium, thus pegging the cost at a tantalizing $29.90 per share (excluding broker charges). This represents a striking parallel universe wherein paying $32.85/share today might seem overpriced in comparison.
The Art of Probability
With the $31.00 strike offering a handsome 6% discount to the present trading price, this put contract dangles the possibility of ending futilely. Currently, the analytics forecast a 69% likelihood of this outcome. Stock Options Channel pledges to diligently monitor these odds, encapsulating them in a visual feast on our website. Should this contract meet an inglorious demise, the premium reaps a 3.55% profit on the cash investment, translating to a jaw-dropping 22.33% annually — our trademark YieldBoost.
Insight into Collective Memory
In parallel, let’s explore the calls side and the call contract tethered at the $34.00 strike, boasting a bid of $1.55. Imagine acquiring TSEM shares at $32.85/share and then engaging in a “covered call” routine by selling this contract; this action commits to selling the stock at $34.00. The ensuing total return (sans dividends) of 8.22% at May 17th expiration (barring brokerage fees) sounds alluring, but exposes the risk of missing out on skyward TSEM trends. Dive into the historical trading annals of Tower Semiconductor Ltd., and factor in the fundamental business ethos. The chart reveals TSEM’s year-long trading voyage, with the $34.00 strike highlighted in crimson hues.
Gauging Risk and Reward
Note the $34.00 strike flaunting a 4% premium to the current trading stock, envisaging an out-of-money scenario. The covered call could potentially nosedive into worthlessness, allowing the investor to retain both shares and collected premium. Presently, data-driven insights predict a 54% chance of this dismal outcome. As days unfold, Stock Options Channel will monitor these odds with eagle eyes, transforming them into an illuminating graphical showcase. Should this contract face an anticlimactic finale, the premium yields an extra 4.72% of gain to the investor, equating to a staggering 29.69% annualized — our cherished YieldBoost.
Intriguing Volatility Metrics
The realm of implied volatility is a gripping realm: the put contract showcases a 40% figure, while its call contract counterpart boasts a 37% metric. Delve deeper, and you’ll discover the tangible trailing twelve-month volatility rating at 33%, meticulously calculated across the last 251 trading day closures alongside the current TSEM price of $32.85. For a treasure trove of additional put and call option stratagem inspirations, navigate to the verdant pastures of StockOptionsChannel.com.
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The perspectives articulated herein emanate from the author’s keen observations and do not necessarily mirror those held by Nasdaq, Inc.
