Intuitive Surgical Options Analysis: A Closer Look at May Contracts

Investors in Intuitive Surgical Inc (Symbol: ISRG) encountered fresh options today set to expire on May 30th. At Stock Options Channel, our YieldBoost formula reviewed the ISRG options chain for these new May 30th contracts and pinpointed a noteworthy put and call contract.

Exploring the Put Contract

The identified put contract, with a $495.00 strike price, currently carries a bid of $26.70. By opting to sell-to-open this put contract, an investor agrees to purchase ISRG stock at $495.00 and simultaneously collects a premium. This results in a cost basis of the shares effectively at $468.30, before accounting for broker commissions. For those interested in acquiring ISRG shares, this could be a compelling alternative compared to the current trading price of $498.11/share.

Since the $495.00 strike represents about a 1% discount to the present trading price, there’s a possibility the put contract may expire worthless. Current analytical data, comprising greeks and implied greeks, estimates the odds of this happening at 57%. Stock Options Channel will monitor these odds over time and feature a chart on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would yield a 5.39% return on the cash commitment, translating to a 39.38% annualized return, which we refer to as YieldBoost.

Price Movements in Context

A chart illustrating the trailing twelve-month trading history for Intuitive Surgical Inc showcases the $495.00 strike’s position relative to that history:

Analyzing the Call Contract

Examining the call side of the options chain, a contract at the $505.00 strike price is currently bid at $27.80. If an investor acquires shares of ISRG at the current price of $498.11/share and subsequently sells-to-open this call contract as a “covered call,” they commit to sell the stock at $505.00. Collecting the premium will yield a total return of 6.96%, assuming the stock is called away by the May 30th expiration (not including any dividends). However, this approach could potentially cap upside gains if ISRG shares surge significantly, making it critical to analyze ISRG’s trailing twelve-month trading history and foundational business data. The following chart highlights the $505.00 strike within ISRG’s trading history:

The $505.00 strike is approximately 1% above the current trading price, indicating a chance that this covered call contract might expire worthless. In this scenario, the investor retains both their shares and the collected premium. Current analytical data estimates the odds of this happening at 48%. Over time, Stock Options Channel will track and publish changes in these odds and the historical trading pattern of the option contract. Should the covered call expire worthless, the premium would represent a 5.58% additional return—or 40.74% annualized —which we also refer to as YieldBoost.

Implied and Actual Volatility

The implied volatility of the put contract stands at 44%, while the call contract has an implied volatility of 43%. Analyzing the actual trailing twelve-month volatility—factoring in the last 251 trading days alongside today’s price of $498.11—we calculate it to be 33%. For additional insights into various put and call options contracts, visit StockOptionsChannel.com.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.