New Trading Options for Lucid Group Could Offer Investors Opportunity

Today, investors in Lucid Group Inc (Symbol: LCID) saw new options begin trading for the July 18th expiration. One key factor influencing the price an option buyer is willing to pay is the time value. With 108 days until expiration, these newly trading contracts may provide an opportunity for sellers of puts or calls to obtain a higher premium compared to contracts with a nearer expiration.

Our YieldBoost formula at Stock Options Channel examined the LCID options chain and identified a noteworthy call contract among the new July 18th offerings. The call contract at the $3.00 strike price has a current bid of 25 cents. Investors purchasing shares of LCID at the current price of $2.52 per share and then selling that call contract as a “covered call” would be committing to sell the Stock at $3.00. This strategy, taking the premium into account, would yield a total return of 28.97% (excluding any dividends and before broker commissions) if the stock is called away at the July 18th expiration.

However, if LCID shares appreciate significantly, the seller could miss out on some upside. Thus, it is essential to consider Lucid Group’s trailing twelve-month trading history and examine the business fundamentals. Below is a chart illustrating LCID’s trailing twelve-month trading activity, with the $3.00 strike highlighted in red:

The $3.00 strike price represents approximately a 19% premium over the current trading price, meaning it is out-of-the-money by that percentage. There is a possibility that the covered call contract might expire worthless, allowing the investor to retain both their shares and the collected premium. Analytical data, including greeks and implied greeks, suggest a 53% likelihood of this scenario occurring. Over time, we will track and publish the changing odds on our website, along with a chart of the trading history for this option contract.

If the covered call contract does expire worthless, the premium collected would add a 9.92% boost to the investor’s return, equating to an annualized return of 33.53%, which we call the YieldBoost.

The implied volatility for the call contract example is 89%. In contrast, the actual trailing twelve-month volatility—considering the closing values from the last 251 trading days and the current price of $2.52—is calculated at 77%. For additional options contract ideas to explore, visit StockOptionsChannel.com.

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