New Possibilities Emerge
As of today, NXP Semiconductors NV (Symbol: NXPI) investors have a new avenue to explore with the introduction of options for the September 2025 expiration. These newly minted contracts open the door to a realm of opportunity for both puts and calls, offering a unique window of time value with 360 days until the deadline. The allure lies in the potential for sellers to fetch a premium higher than those with a closer expiration date.
Eye on the Prize
For those intrigued by the $230.00 strike price put contract, the current bid stands at $27.60. By opting to sell-to-open this put contract, investors commit to buy the shares at $230.00 but reap the premium, effectively setting the cost basis at $202.40 per share. A tempting alternative for those eyeing NXPI shares, given the current price of $234.49/share.
Revisiting History
Examining the $230.00 strike in the context of the stock’s history, it mirrors an approximate 2% discount to the current trading price. This out-of-the-money status plays into the equation, with a 63% likelihood of the put contract expiring worthless. Any such outcome would yield a 12.00% return on the cash commitment, equating to a 12.17% annualized return.
Exploring Potential Gains
On the calls front, the $250.00 strike call contract is of interest, commanding a bid of $29.20. With the option to sell shares at $250.00, investors stand to gain a total return of 19.07% at the September 2025 expiration. Although, caution is advised, as substantial upside could remain untapped should NXPI shares skyrocket.
Anticipating Outcomes
With the $250.00 strike call carrying an approximate 7% premium to the current trading price, caution is advisable. Possibilities materialize for the covered call contract to expire without value, foreseeing a 46% likelihood according to current analytical data. A null outcome would see an extra 12.45% return for investors, amounting to a 12.63% annualized boost.
Understanding Volatility
Implied volatility for the put contract stands at 39%, and for the call contract, it hovers around 37%. In contrast, the actual trailing twelve month volatility, based on closing values and today’s price, pans out to be 35%. These figures offer investors valuable insights as they navigate the world of options trading.
