Mastercard Options Trading: Insight into New Opportunities
Investors in Mastercard Inc (Symbol: MA) welcomed new options available for trading today, specifically set to expire on February 28th. At Stock Options Channel, we utilized our YieldBoost formula to identify significant contracts within the new options chain, highlighting both a put and call option that may appeal to traders.
Put Options Offer a Discounted Entry Point
The put contract with a $510.00 strike price currently shows a bid of $10.45. By selling to open this put contract, an investor agrees to buy the stock at $510.00 while collecting the premium, bringing the effective cost basis down to $499.55 (before broker fees). For those planning to invest in MA, this provides a compelling alternative to paying the current market price of $514.40 per share.
This $510.00 strike represents a margin of approximately 1% below the current share price, indicating it is out-of-the-money by that same percentage. Current analysis suggests a 59% chance that this put option will expire worthless. Stock Options Channel will continue to monitor this statistic, providing ongoing updates and insights on our website. Should the put option expire worthless, selling it would yield a 2.05% return on the initial cash commitment, equating to an annualized return of 14.66% — a concept we refer to as the YieldBoost.
Call Options and Potential Returns
On the call side, the contract at a $520.00 strike price offers a bid of $12.05. If an investor buys shares of MA at the current price of $514.40 and then sells to open this call option as a “covered call,” they agree to sell the stock at $520.00. Including the collected premium, this strategy could yield a total return of 3.43%, assuming the stock is called away by the February 28th expiration—this excludes any dividends and broker commissions. However, investors should be aware that significant price increases in MA could mean missed profits, underscoring the importance of analyzing Mastercard’s historical trading patterns and business fundamentals.
The $520.00 strike price sits just about 1% above the current trading value, suggesting it too might expire worthless. Analytical data reveals a 51% likelihood of this situation. As with the put options, we will track these odds over time, offering updates on our website. If the covered call expires worthless, it would provide an additional return of 2.34%, or an impressive 16.77% annualized—also represented as a YieldBoost.
Understanding Volatility
The implied volatility for the put contract stands at 22%, while the call contract shows 20% implied volatility. In contrast, the actual trailing twelve-month volatility, based on the last 251 trading days and the current price of $514.40, is calculated at 16%. For more insightful options contract ideas, visit StockOptionsChannel.com.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
