New Options for Medical Properties Trust: Opportunities for Investors

The trading world is buzzing as new options for Medical Properties Trust Inc (Symbol: MPW) become available today, set to expire on June 20th. With 114 days until expiration, these options could offer sellers of puts or calls a chance to earn a higher premium compared to contracts with sooner expiration dates.

Highlighted Options: Potential Earnings for Investors

Among the new contracts, a notable put option exists at a $4.50 strike price, currently bidding at 49 cents. By selling this put contract, an investor agrees to purchase MPW shares at $4.50 while receiving the premium. After accounting for this premium, the effective cost basis would be $4.01 per share (before broker fees). For those interested in buying MPW shares, this strategy might be a more appealing option compared to paying the current market price of $4.84 per share.

This $4.50 strike option has an approximate 7% discount to the stock’s current trading price, meaning it is out-of-the-money by that percentage. Current analysis indicates a 62% chance that the put option could expire worthless. Stock Options Channel will continuously monitor these odds, providing updates on their website. If it does expire worthless, the premium would yield a 10.89% return on the cash commitment, equating to an impressive 34.88% annualized return—a figure Stock Options Channel refers to as the YieldBoost.

Below is a chart illustrating the past twelve months of trading for Medical Properties Trust Inc, featuring the $4.50 strike price in green:

Call Options: A Strategic Approach for Existing Holders

Turning to call options, the $5.00 strike price call contract has a current bid of 28 cents. By purchasing MPW shares at $4.84 and then writing a covered call at this strike price, an investor commits to sell at $5.00. By factoring in the premium, this would result in a total expected return of 9.09% if the stock is called away at expiration on June 20th (excluding any dividends). However, if MPW’s price surges, there may be significant upside potential lost by selling this call option. Thus, examining MPW’s historical performance and the company’s fundamentals remains crucial for making informed decisions.

Below is a chart depicting MPW’s trailing twelve months of trading, with the $5.00 strike marked in red:

The call option at the $5.00 strike is approximately 3% above the current trading price, categorizing it as out-of-the-money. There’s a chance the covered call could expire worthless, allowing the investor to retain both their shares and the premium. Current data indicates a 49% probability of this outcome. Stock Options Channel will also keep track of these odds over time and provide updates on their performance.

If the covered call expires worthless, the premium would yield an additional return of 5.79%, equivalent to an annualized 18.53% return, also classified as a YieldBoost.

Notably, the implied volatility for the put option is 62%, while the call option’s implied volatility stands at 65%. In comparison, the actual trailing twelve-month volatility, calculated from the last 250 trading sessions and today’s stock price of $4.84, is 60%. For further ideas on put and call options, visit StockOptionsChannel.com.

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Also see:

• Safety Insurance Group Historical Earnings
• Institutional Holders of AQR
• AAXJ Options Chain

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