New Options for Sphere Entertainment Co: Exploring Long-Term Investment Opportunities

Investors of Sphere Entertainment Co (Symbol: SPHR) were presented with new options this week for contracts expiring in August 2025. The time value, a significant factor affecting option pricing, can create unique opportunities. With 234 days until expiration, these contracts might offer higher premiums for sellers of puts and calls when compared to contracts that expire sooner. Our YieldBoost formula at Stock Options Channel has pinpointed an intriguing put and call contract within the SPHR options chain.

Put Contract Potential at $37.50 Strike

At the $37.50 strike price, the put contract currently holds a bid of $5.30. If an investor chooses to sell-to-open this put, they would be agreeing to purchase the stock at $37.50 while earning the premium. This effectively lowers the cost basis to $32.20 (excluding any broker fees). For those already eyeing SPHR shares at $37.85 each, this could be a more appealing choice.

This $37.50 strike is about a 1% discount from the current trading price, indicating it is out-of-the-money by that margin. Current analytical data indicates a 61% chance that the put contract could expire worthless. Stock Options Channel will monitor these odds over time, presenting a chart on our website dedicated to this contract. If the contract does expire without value, the premium would yield a 14.13% return on the cash commitment, which annualizes to 22.05% — a metric we refer to as the YieldBoost.

Below is a chart detailing the trailing twelve-month trading history for Sphere Entertainment Co, illustrating where the $37.50 strike lies within this context:

Analyzing Covered Calls at the $40.00 Strike

On the call side, the contract priced at $40.00 has a current bid of $5.40. If an investor purchases SPHR shares at $37.85 and sells this call as a “covered call,” they agree to sell the stock for $40.00. Coupled with the premium, this could yield a total return of 19.95%, assuming the stock is called away at the August 2025 expiration (again, broker commissions not included). However, potential gains could be forfeited if SPHR shares significantly appreciate, highlighting the importance of reviewing the company’s trailing twelve-month trading history and its fundamental business health.

The chart below shows SPHR’s trailing twelve-month trading history, with the $40.00 strike marked:

Notably, the $40.00 strike is approximately 6% above the current trading price, indicating it is out-of-the-money by that percentage. There’s a 45% chance the covered call contract expires worthless, allowing the investor to retain both the stock and the premium collected. Should this occur, the premium would translate into a 14.27% supplemental return, equating to 22.26% when annualized — another instance of our YieldBoost.

The put contract indicates an implied volatility of 55%, while the call contract shows an implied volatility of 53%. In contrast, the actual trailing twelve-month volatility, calculated using the last 251 trading day closing values along with today’s price at $37.85, stands at 45%. For more ideas regarding provided put and call options contracts, please check out StockOptionsChannel.com.

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