Academy Sports Options Trading Insights for May Expiration
Investors in Academy Sports & Outdoors Inc (Symbol: ASO) recently observed new options trading begin for the May 16th expiration. At Stock Options Channel, our YieldBoost formula analyzed the options chain and highlighted one put and one call contract of significant interest.
Put Option Analysis
The put contract available at the $45.00 strike price currently has a bid of 95 cents. By selling to open this put contract, an investor commits to buying the stock at $45.00 while collecting the premium, effectively reducing their cost basis to $44.05 per share (excluding broker commissions). For those considering buying shares of ASO, this strategy may offer a more attractive entry point compared to the current market price of $48.95 per share.
This $45.00 strike reflects an approximate 8% discount to the current trading price, meaning it’s out-of-the-money by that same percentage. Current analytics indicate a 76% probability that the put contract will expire worthless. At Stock Options Channel, we will monitor these odds over time, providing updates on our website under the contract detail page. If the contract expires worthless, the premium would yield a 2.11% return on the cash commitment, or an annualized 15.11%, which we term YieldBoost.
Below is a chart displaying the trailing twelve-month trading history for Academy Sports & Outdoors Inc, with the $45.00 strike clearly marked in green:
Call Option Insights
On the call side, the $50.00 strike call contract has a current bid of $1.90. If investors buy ASO shares at the current price of $48.95 and sell to open this call contract as a covered call, they commit to selling the stock at $50.00. Including the premium, this arrangement offers a total return of 6.03% if the stock is called away at the May 16th expiration (before broker commissions). However, significant upside potential could be forfeited if ASO shares significantly increase, making it crucial to examine ASO’s trading history and business fundamentals.
Below is a chart showing ASO’s trailing twelve-month trading history, highlighting the $50.00 strike in red:
The $50.00 strike represents about a 2% premium over the current trading price, placing it out-of-the-money by that percentage. There’s also a chance that the covered call contract could expire worthless, allowing the investor to retain both their shares and the premium collected. Current analytics suggest a 52% likelihood of this outcome. Stock Options Channel will continue to track these probabilities and provide updates on our website. If the covered call expires worthless, the premium would increase the investor’s returns by 3.88% or an annualized 27.78%, also referred to as YieldBoost.
The implied volatility for the put contract stands at 38%, while the call contract’s implied volatility is at 36%. In contrast, the actual trailing twelve-month volatility, considering the last 250 trading days alongside today’s price of $48.95, is calculated at 36%. For further insights into other put and call options contracts, 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.
