New Options Available for Futu Holdings Investors with May Expiration

Investors of Futu Holdings Limited – American Depositary Shares (Symbol: FUTU) will find new options rolling out this week, set for expiration on May 30th. Our YieldBoost formula has examined the FUTU options chain, identifying one noteworthy put and one call contract.

Put Contract Insight

The put contract at the $111.00 strike price currently has a bid of $4.60. If an investor opts to sell-to-open this put contract, they commit to buy the stock at $111.00. Additionally, they will collect the premium, effectively reducing their cost basis to $106.40 before broker commissions. For those interested in acquiring shares of FUTU, this might be a more appealing option compared to the current price of $112.08 per share.

Since the $111.00 strike price represents approximately a 1% discount from the current trading price, there is a possibility that the put contract may expire worthless. According to current analytical data, including greeks and implied greeks, the likelihood of this occurrence stands at 56%. We will monitor these odds, updating data on our website’s contract detail page. Should the contract indeed expire worthless, this premium could yield a 4.14% return on the cash commitment, translating to an annualized return of 151.26% — a figure we refer to as the YieldBoost.

Charting the Performance

Below is a chart illustrating the trailing twelve-month trading history for Futu Holdings Limited – American Depositary Shares. The chart highlights where the $111.00 strike price stands in relation to this history:

Call Contract Overview

On the calls side, the contract at the $114.00 strike price has a current bid of $4.40. If investors purchase shares of FUTU at the existing price of $112.08 each and sell-to-open this call contract as a “covered call”, they would be agreeing to sell the stock at $114.00. The premium collected would result in a total return of 5.64% should the stock get called away at the May 30th expiration, not accounting for dividends and before broker commissions.

However, if FUTU shares significantly rise in value, investors may miss out on potential upside. Thus, assessing both the twelve-month trading history and the company’s fundamentals is essential. Below is a chart showing FUTU’s trading history with the $114.00 strike price marked:

The $114.00 strike price denotes about a 2% premium to the current trading price. As such, there is a chance that the covered call contract may expire worthless. If this happens, the investor retains both their shares and the premium collected. Current data indicates a 53% chance of this scenario. We will continue to track these odds and publish updates on our website, including the trading history of the option contract. Should the covered call expire worthless, the premium would convert to a 3.93% additional return for the investor, or an annualized 143.29% — another instance of our YieldBoost.

Both the implied volatility for the put and call contracts is approximately 72%. We calculate the actual trailing twelve-month volatility, based on the last 250 trading days and today’s price of $112.08, to be 70%. For more options contract ideas worth considering, please refer to 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.