New IBM Options for May 2nd: Potential Opportunities for Investors

Key Details on New IBM Options Contracts

Investors in International Business Machines Corp (Symbol: IBM) were presented with new options today for the May 2nd expiration date. At Stock Options Channel, our YieldBoost formula has assessed the IBM options chain and identified two contracts of special significance: one put and one call.

Put Option Insights

The put contract set at a $245.00 strike price currently has a bid of $9.80. If an investor chooses to sell-to-open this put contract, they would be agreeing to buy shares of IBM at $245.00. Simultaneously, they would collect the premium, leading to a reduced cost basis of $235.20 per share (before broker commissions). This strategy presents an appealing alternative to acquiring shares at the current market price of $247.51.

This $245.00 strike corresponds to roughly a 1% discount from the current trading price, making it out-of-the-money by that margin. Consequently, there is a 57% chance that the put contract may expire worthless, according to current analytical data, including the greeks and implied greeks. At Stock Options Channel, we will monitor these odds over time and provide updates on our website. If the contract expires worthless, the premium collected would yield a 4.00% return on the cash commitment, or an annualized rate of 29.20%—a metric we refer to as YieldBoost.

Charting IBM’s Recent Trading History

Below is a chart depicting the trailing twelve-month trading history of International Business Machines Corp, indicating the location of the $245.00 strike in green:

Call Option Insights

Turning to the call side of the option chain, the call contract at the $250.00 strike price currently bids at $11.25. Should an investor purchase shares of IBM at the current price of $247.51, and then sell-to-open this call contract as a “covered call,” they would be agreeing to sell their shares at $250.00. Including the premium, this scenario leads to a total potential return of 5.55% if the stock is called away at the May 2nd expiration (excluding any dividends and before broker commissions). However, there is a risk of missing additional upside if IBM shares experience significant gains, emphasizing the need to analyze the company’s fundamentals along with historical trading data.

The chart below shows IBM’s trailing twelve-month trading history, with the $250.00 strike indicated in red:

The $250.00 strike represents an approximate 1% premium over the current trading price, positioning it out-of-the-money by that same percentage. There is a 49% probability that the covered call could expire worthless, allowing the investor to keep both their shares and the premium collected. We will continue to track these odds on our website, updating our charts on the trading history of this option contract. Should the covered call expire worthless, the premium would account for a 4.55% additional return for the investor, or 33.18% annualized—another example of our YieldBoost.

Analyzing Volatility and Historical Trends

The implied volatility for the put contract is 37%, while the call contract shows an implied volatility of 38%. Meanwhile, based on the last 250 trading days, including today’s price of $247.51, the actual trailing twelve-month volatility stands at 25%. For further options trading ideas worth exploring, visit 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.