Lyft Options Trading: Exploring Potential Gains on New Contracts

Investors in Lyft Inc (Symbol: LYFT) witnessed the launching of new options today for the August 15th expiration. With 161 days until expiration, these freshly initiated contracts offer both put and call sellers a chance to earn higher premiums compared to those with nearer expirations. According to Stock Options Channel, their YieldBoost formula has examined LYFT’s options chain, highlighting a particular put and call contract that merits attention.

Put Contract Analysis

The put contract at the $11.00 strike has a current bid of $1.09. Selling this put contract obligates an investor to purchase the stock at $11.00 while also collecting the premium. This arrangement effectively lowers the cost basis of the shares to $9.91 (before broker commissions). For an investor committed to buying shares of LYFT, this strategy could prove to be a beneficial alternative to purchasing at the current market price of $12.51 per share.

Notably, the $11.00 strike price represents approximately a 12% discount to the current trading price. This means there is a chance the put contract could expire worthless, with analytical data indicating a 70% probability of this scenario. Stock Options Channel will continuously monitor these odds, updating their published charts on the contract detail page. If the contract expires without value, the premium will represent a 9.91% return on the cash commitment, or an annualized return of 22.47%, a metric Stock Options Channel refers to as YieldBoost.

Call Contract Analysis

On the call side, the contract at a $17.00 strike price has a current bid of 78 cents. If an investor chooses to buy LYFT shares at the current price of $12.51 per share and simultaneously sells this call as a “covered call,” they would commit to selling the stock at $17.00. By also collecting the premium, this strategy could yield a total return of 42.13% (excluding dividends) if the stock is called away by the August 15th expiration. However, substantial upside potential could be forfeited if LYFT shares rise significantly, underscoring the importance of examining historical performance and business fundamentals.

The $17.00 strike price, representing approximately a 36% premium over the current trading price, carries the possibility of the call contract expiring worthless. Should this occur, the investor retains both the shares and the premium. Analyzing the current data suggests a 65% probability of this outcome. Stock Options Channel will track and publish these odds on their website, including the trading history of the option contract. If the covered call expires worthless, the premium translates to an additional 6.24% return for the investor or an annualized return of 14.14%, also identified as YieldBoost.

The implied volatility for the put contract stands at 67%, while the call contract has an implied volatility of 71%. In contrast, the actual trailing twelve-month volatility, calculated using the last 250 trading day closing values and the current price of $12.51, is 56%. For further opportunities in put and call options, 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.