New Matador Resources Options Offer Potential for Investors

Investors in Matador Resources Co (Symbol: MTDR) received new options this week for the December 19th expiration. With 241 days until expiration, these contracts present possible opportunities for sellers of puts and calls to capture higher premiums compared to options with closer expiration dates. Our YieldBoost formula at Stock Options Channel has analyzed the MTDR options chain and identified a notable put and a call contract.

Put Contract Opportunity

The put contract with a $40.00 strike price currently has a bid of $5.50. An investor selling-to-open this contract commits to buying the stock at $40.00. However, they will collect the premium, effectively lowering their cost basis to $34.50 (excluding broker commissions). For those already interested in purchasing shares, this could be an attractive alternative to paying the current market price of $40.34 per share.

Given that the $40.00 strike represents approximately a 1% discount to the current trading price, there’s a possibility that the put contract might expire worthless. Current analysis, including greeks and implied greeks, indicates a 60% probability of this outcome. Our team will monitor these odds over time, publishing updates on our website under the contract detail page for this specific contract. If the contract expires worthless, the premium could yield a 13.75% return on cash commitment or 20.82% annualized—what we refer to as the YieldBoost.

Trading History Insight

Below is a chart showcasing the trailing twelve-month trading history for Matador Resources Co, highlighting where the $40.00 strike sits relative to that history:

Call Contract Potential

Shifting to the calls side of the option chain, the call contract at the $42.50 strike price has a current bid of $5.30. If an investor buys shares of MTDR at the current market price of $40.34 and sells-to-open this call contract as a “covered call,” they commit to selling the stock at $42.50. The premium collected in this scenario could result in a total return of 18.49% if the stock is called away by the December 19th expiration (before broker commissions). However, significant upside could remain unrealized if MTDR shares increase substantially, making it essential to consider both the one-year trading history and business fundamentals.

Below is the chart illustrating MTDR’s trailing twelve-month trading history, with the $42.50 strike highlighted:

It’s noteworthy that the $42.50 strike price represents about a 5% premium to the current trading price of the stock. There remains a chance that the covered call contract may expire worthless, allowing the investor to retain both their shares and the collected premium. Current analyses suggest a 46% likelihood of this outcome. Our website will track and publish updates on these odds over time, including the trading history of the option contract itself. Should the covered call contract expire worthless, the premium would offer an additional return of 13.14%, or 19.89% annualized—also classified as a YieldBoost.

Volatility Metrics

The implied volatility for the put contract stands at 50%, while the call contract’s implied volatility is 49%. We also calculated the actual trailing twelve-month volatility, based on the last 250 trading days and the current price of $40.34, to be 46%. For additional put and call options contract ideas worth exploring, visit StockOptionsChannel.com.

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also see:

• Institutional Holders of LPCN
• Funds Holding RMCF
• COBZ Options Chain

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