New Options Available for Lumentum Holdings Inc Investors

Investors in Lumentum Holdings Inc (Symbol: LITE) discovered new options for the May 16th expiration this week. At Stock Options Channel, our YieldBoost formula examined the LITE options chain and identified a compelling put and call contract worth noting.

Put Contract Insights

The put contract with a $70.00 strike price currently has a bid of $5.80. If an investor decides to sell-to-open this put contract, they would agree to buy the Stock at $70.00. This transaction would allow the investor to collect the premium, lowering their effective purchase cost to $64.20 per share (before broker commissions). For those considering an investment in LITE, this strategy offers a potential advantage over the current trading price of $71.84 per share.

This $70.00 strike, representing about a 3% discount from the current trading price, raises the chance that the put contract may expire worthless. Current analytical data indicate a 60% probability of this outcome. Stock Options Channel will monitor these odds over time, providing updates on our website about changes in this statistic. If the contract does expire worthless, investors would see an 8.29% return on their cash commitment, translating to an annualized yield of 57.06%—an approach we refer to as the YieldBoost.

Charting Trading History

Below is a chart displaying the trailing twelve-month trading history for Lumentum Holdings Inc, with the $70.00 strike clearly marked:

Call Contract Analysis

Turning to the calls side, the call contract at the $72.50 strike price has a current bid of $7.00. If an investor buys shares of LITE stock at $71.84 and then sells-to-open that call contract as a “covered call,” they commit to selling the Stock at $72.50. Including the premium, this strategy could yield a total return of 10.66% if the Stock is called away at expiration on May 16th (before broker commissions). However, if LITE shares increase significantly, considerable upside could be missed, making it essential to analyze Lumentum’s trading history and underlying business fundamentals. Below is the chart for LITE’s trailing twelve-month trading history, with the $72.50 strike highlighted:

The $72.50 strike price represents roughly a 1% premium over the current trading price. Thus, there is a possibility that the covered call may expire worthless, allowing investors to retain both their shares and the premium collected. The current analytical data suggests a 46% probability of this scenario. Stock Options Channel will track these odds over time, providing a detailed chart of the option contract’s trading history. If this covered call expires worthless, the premium would yield a 9.74% additional return for the investor, or 67.10% annualized, which is also classified as YieldBoost.

Volatility Overview

The implied volatility for both the put and call contract examples is around 67%. Meanwhile, the actual trailing twelve-month volatility, based on the last 249 trading days and today’s price of $71.84, is calculated at 60%. For more put and call options worth considering, visit 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.