New Options Available for Alphabet Inc. Set to Expire in November
Investors in Alphabet Inc. (Symbol: GOOGL) welcomed the availability of new options today, set to expire on November 21st. Time value is a crucial factor in determining how much an option buyer is willing to pay. With 238 days until expiration, these new contracts may present sellers of puts or calls the chance to earn higher premiums than those available with nearer expirations. At Stock Options Channel, we used our YieldBoost formula to analyze the GOOGL options chain, identifying one noteworthy put contract and one call contract.
Highlighted Put Contract
The put contract at the $155.00 strike price is currently bid at $10.85. Selling-to-open this put would require the investor to purchase the stock at $155.00. However, by collecting the premium, the effective cost basis of the shares would drop to $144.15 (before broker commissions). This strategy could be an attractive option for investors looking to acquire shares of GOOGL, especially given the current share price of $158.49.
Notably, the $155.00 strike is about 2% below the current trading price of GOOGL, making it out-of-the-money by that percentage. The current analytical data, including greeks and implied greeks, suggest a 63% chance that this put contract could expire worthless. Stock Options Channel will continuously monitor these odds and publish updates on our website. If the contract does expire worthless, the premium would yield a 7.00% return on the cash commitment, or an annualized 10.73%—a figure we refer to as YieldBoost.
Trailing Twelve-Month Trading History
Below, we present a chart depicting the trailing twelve-month trading history for Alphabet Inc. The chart highlights where the $155.00 strike is positioned relative to historical data:
Featured Call Contract
On the calls side, the $165.00 strike contract currently has a bid of $14.65. If an investor buys shares of GOOGL at the present price of $158.49 and sells-to-open this call contract as a covered call, they would agree to sell the stock at $165.00. By also collecting the premium, this could result in a total return of 13.35% (excluding dividends, if any) if the stock is called away by the November 21st expiration.
It is important to note that significant upside may be left on the table if GOOGL shares rise sharply. Therefore, analyzing the trailing twelve-month trading history and considering the company’s fundamentals are crucial steps. The chart below displays GOOGL’s trading history, with the $165.00 strike highlighted:
Since the $165.00 strike represents an approximate 4% premium above the current trading price, there is a possibility that this covered call contract could also expire worthless. In such a scenario, the investor keeps both their shares and the premium. Current analytical data suggest a 47% probability that this might occur. Stock Options Channel will track these odds and share updates. If the covered call does expire worthless, the premium would equate to a 9.24% additional return, or 14.17% annualized, which is also termed as YieldBoost.
Market Volatility Insights
The implied volatility for the put contract is 31%, while for the call contract it is 32%. In contrast, the actual trailing twelve-month volatility, calculated from the last 250 trading day closing values alongside today’s price of $158.49, stands at 29%. For insights on more miscellaneous put and call options, consider visiting 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.
