New Options Strategies Emerge for Tradeweb Markets Investors
Investors in Tradeweb Markets Inc (Symbol: TW) are seeing new options available this week with a June 20th expiration date. Our YieldBoost formula at Stock Options Channel has reviewed the TW options chain and highlighted two contracts worth considering: one put and one call.
Exploring the $130 Put Contract
The put contract at the $130.00 strike price currently has a bid of $4.30. If an investor sells to open this put contract, they are agreeing to buy the stock at $130.00 while collecting the premium. This effectively lowers the cost basis to $125.70 (excluding broker commissions). For those interested in acquiring TW shares, this option represents a potentially advantageous alternative to purchasing at the current price of $131.04 per share.
Since the $130.00 strike price offers about a 1% discount compared to the current trading price, there is a chance the put contract may expire worthless. Current analytical data suggests there is a 59% probability of this happening. We will track these odds over time, publishing updated charts on our website’s contract detail page. If the contract does expire worthless, the premium collected would yield a 3.31% return on the cash commitment, or 20.12% annualized, which we refer to as the YieldBoost.
Below, we present a chart showing Tradeweb Markets Inc’s trailing twelve-month trading history, with the $130.00 strike price highlighted:
Analyzing the $135 Call Contract
On the call side of the options chain, the contract at the $135.00 strike price has a bid of $4.80. By purchasing shares at the current price level of $131.04 and selling to open this call contract as a “covered call,” the investor would commit to sell the stock at $135.00. With the added premium, this results in a total potential return of 6.68% if the stock is called away at the June 20th expiration date (before broker commissions). However, investors should recognize the possibility of missing out on potential gains if TW shares see substantial increases.
Understanding the twelve-month trading history of Tradeweb Markets Inc is essential in this analysis. The chart below highlights the $135.00 strike price:
This $135.00 strike price represents approximately a 3% premium to the current trading price. Thus, there’s a chance the covered call may expire without value, allowing the investor to retain both their shares and the premium collected. Current analytical forecasts indicate a 51% chance of this occurring. We will also monitor these odds on our website, providing updates on the contract’s trading history. If the covered call expires worthless, the collected premium would reflect a 3.66% boost in return for the investor, or 22.28% annualized, similarly classified under our YieldBoost system.
The implied volatility for the put contract is currently 33%, while the call contract stands at 35%. In contrast, we calculate the actual trailing twelve-month volatility to be 26%, based on the last 249 trading days’ closing values, along with today’s price of $131.04 per share. For additional options contract concepts worth exploring, please 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.
