MACOM Technology Options Offer Strategic Opportunities for Investors
Investors in MACOM Technology Solutions Holdings Inc (Symbol: MTSI) welcomed new options for trading this week, focusing on the June 20th expiration. Through Stock Options Channel, our YieldBoost formula has analyzed the MTSI options chain and identified noteworthy put and call contracts.
Assessing the New Put Contract
The put contract with a strike price of $95.00 currently has a bid of $5.80. Selling this put contract enables an investor to commit to buying shares of MTSI at $95.00 while collecting the premium. This arrangement effectively lowers the cost basis to $89.20 per share, prior to broker commissions. For investors interested in acquiring MTSI shares, this could be a more appealing option than purchasing at the current price of $96.74 per share.
The $95.00 strike price is approximately 2% below the stock’s current trading price, making it out-of-the-money. Current data indicates a 59% probability that this put contract will expire worthless. Stock Options Channel will continue to track these odds and provide updated analytics, including a chart on our contract detail page. If the contract does expire worthless, the premium would yield a 6.11% return on the cash commitment, translating to a 37.77% annualized return, which we refer to as YieldBoost.
Below is a chart illustrating the trailing twelve-month trading history for MACOM Technology Solutions Holdings Inc, highlighting the position of the $95.00 strike price:
Evaluating the Call Contract
On the call side, the contract with a $100.00 strike price has a current bid of $5.60. If an investor purchases shares of MTSI at $96.74 and then sells this call contract as a covered call, they commit to selling the stock at $100.00. Including the premium collected, this setup could result in a total return of 9.16% if the stock is called away on June 20th, excluding any dividends.
However, this strategy also risks missing out on potential upside if MTSI shares experience significant gains. Therefore, reviewing the trailing twelve-month trading history and examining the company’s fundamentals is crucial. The following chart depicts MTSI’s trading history, with the $100.00 strike marked in red:
Given that the $100.00 strike price is about 3% above the current trading price, there’s a 51% chance that this covered call contract could expire worthless. If that happens, the investor retains both the shares and the premium collected. Stock Options Channel will monitor these odds for any changes and publish updates over time. Should the call expire worthless, it would represent a 5.79% additional return for the investor, equating to a 35.81% annualized return, also known as YieldBoost.
Notably, the implied volatility for the put contract is 54%, while the call contract stands at 53%. Our assessment of actual trailing twelve-month volatility, factoring in the last 250 trading days and the current price of $96.74, is calculated at 50%. Investors seeking more options contract ideas may visit StockOptionsChannel.com.
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Additional Insights:
- DLB Average Annual Return
- Institutional Holders of IFSH
- Top Ten Hedge Funds Holding ITDC
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
