RingCentral Options Offer Potential Premiums as September Expiration Approaches
Investors in RingCentral Inc (Symbol: RNG) have new options available today, set to expire on September 19th. A significant factor influencing option pricing is time value. With 163 days until expiration, these new contracts provide an opportunity for put or call sellers to earn higher premiums compared to contracts expiring sooner. The Stock Options Channel’s YieldBoost formula has analyzed the RNG options chain and identified one put and one call contract worth noting.
Put Option Insight
The put contract at a $20.00 strike price is currently bidding at $2.05. If an investor sells this put contract, they commit to buy shares of Stock at $20.00, while also collecting the premium, thus reducing their cost basis to $17.95 (not including broker commissions). For an investor keen on acquiring RNG shares, this scenario offers a compelling alternative to the current market price of $21.70 per share.
The $20.00 strike level provides approximately an 8% discount to the current trading price of the Stock. This means the put option could expire worthless. Current analytical data, including greeks and implied greeks, indicate a 67% likelihood of this occurring. The Stock Options Channel will monitor these odds over time and publish updates on our website. If the contract does expire worthless, it could yield a 10.25% return on the cash commitment or a 22.95% annualized return, which we identify as the YieldBoost.
Call Option Potential
Shifting focus to the call side, a $25.00 strike price call contract is currently bidding at $1.95. Should an investor buy RNG shares at the ongoing price of $21.70 and sell this call contract as a “covered call,” they commit to sell the Stock at $25.00. Including the premium collected, the total potential return (excluding any dividends) would be 24.19% if the shares are called away at the September 19th expiration (before broker commissions). However, investors should consider that significant upside would be available if RNG shares increase rapidly, emphasizing the importance of reviewing both the business fundamentals and the past year’s trading history.
Below is a chart depicting RNG’s trailing twelve months of trading activity, highlighting the position of the $25.00 strike in red:
The $25.00 strike represents about a 15% premium to the current trading price, suggesting a chance that the covered call will expire worthless. In this case, the investor would retain their Stock shares and the premium earned. Data shows a 56% chance the call option may not be exercised. The Stock Options Channel will continuously track these probabilities and update the charts accordingly. A worthless expiration of the call contract would provide an 8.99% increase in returns, or 20.12% annualized, referred to as the YieldBoost.
Volatility Overview
The implied volatility for the put option is 77%, while the call option shows 56% implied volatility. In comparison, the actual trailing twelve-month volatility, calculated from the last 251 trading days as well as today’s price of $21.70, stands at 44%. For additional ideas on put and call options contracts, visit StockOptionsChannel.com.
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also see:
- DGRE Average Annual Return
- CSR YTD Return
- SCTL Insider Buying
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
