New Options for Dave Inc. Present Potential Investment Opportunities

Investors in Dave Inc. (Symbol: DAVE) encountered newly available options today, set to expire on May 16th. The time value is an essential factor in determining the price an option buyer is willing to pay. With 72 days remaining until expiration, the new contracts offer sellers of puts or calls a chance to achieve a higher premium compared to options with a closer expiration. Stock Options Channel has analyzed DAVE’s options chain and identified two compelling contracts.

Analyzing the $85 Put Contract

One notable option is the put contract at the $85.00 strike price, which has a current bid of $12.50. If an investor sells-to-open this put contract, they commit to buying DAVE stock at $85.00 while also collecting the premium. This arrangement effectively lowers the cost basis of the shares to $72.50, minus broker commissions. For an investor interested in acquiring DAVE shares, this alternative could be more appealing than purchasing them directly at $88.00 per share today.

Since the $85.00 strike price is about 3% lower than the current trading price, there’s potential for the put contract to expire worthless. Current analysis, including greeks and implied greeks, indicates a 65% probability that this may happen. Stock Options Channel will monitor these odds over time and publish updates on their website. If the contract does expire worthless, the premium earned would result in a 14.71% return on the cash commitment, which annualizes to 74.59%. This measurement is referred to as the YieldBoost.

Below is a chart showcasing the trailing twelve-month trading history for Dave Inc., with the $85.00 strike price indicated:

Exploring the $90 Call Contract

On the call side, the $90.00 strike price has a current bid of $14.00. If an investor buys shares of DAVE stock at the current price of $88.00 per share and writes the call contract as a “covered call,” they agree to sell the stock at $90.00. By also collecting the premium, this results in a total return of 18.18%, excluding dividends, if the stock is called away at expiration on May 16th. However, significant upside may remain if DAVE shares appreciate further, making it essential to consider the trailing twelve-month trading history and business fundamentals.

Below is a chart highlighting DAVE’s trailing twelve-month trading history, with the $90.00 strike price marked in red:

The $90.00 strike price represents approximately a 2% premium over the current trading price, which means there is also a chance that the covered call will expire worthless. In this case, the investor keeps both the shares and the premium collected. Current analytical data suggests a 40% probability of this occurring. Stock Options Channel will consistently track these odds and publish updates, including the trading history of the option contract. Should the covered call expire worthless, the premium would equate to a 15.91% additional return, or 80.70% annualized, also referred to as the YieldBoost.

The implied volatility for the put contract is 112%, while the call contract shows an implied volatility of 97%. Meanwhile, the actual trailing twelve-month volatility, based on the last 250 trading day closing values and today’s price of $88.00, is calculated to be 89%. For additional ideas on put and call options worth exploring, visit StockOptionsChannel.com.

Top YieldBoost Calls of the S&P 500 »

Also See:

• RYES Videos
• OVLY Videos
• KLIP Options Chain

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