New Options Open Up for Rocket Lab Investors with Attractive Strategies

Investors in Rocket Lab USA Inc (Symbol: RKLB) were presented with fresh options today, effective until the April 4th expiration date. Utilizing our YieldBoost formula, Stock Options Channel has identified notable put and call contracts from the new set of options.

Put Contract Offers a Discounted Entry

The put contract at a $27.00 strike price currently boasts a bid of $3.40. If an investor decides to sell-to-open this put contract, they commit to buying the stock at $27.00 while also collecting the premium. This effectively reduces their cost basis to $23.60 per share, not including broker commissions. For those interested in acquiring shares of RKLB, this approach might offer a more appealing option than the current market price of $27.71 per share.

This $27.00 strike price reflects approximately a 3% discount to the stock’s current trading price, meaning it is out-of-the-money by that percentage. There exists a 63% chance, based on current analytical data (including greeks and implied greeks), that this put contract could expire worthless. Stock Options Channel will monitor these odds and provide updates over time on our website. If the contract does expire worthless, the premium would yield a 12.59% return on the cash commitment or an impressive 93.88% annualized, a metric we refer to as the YieldBoost.

Potential Returns from Covered Calls

On the calls side of the option chain, there’s a call contract at the $31.00 strike price, which has a current bid of $3.25. An investor purchasing shares at the current price of $27.71 and then selling-to-open this call contract as a “covered call” would agree to sell the stock at $31.00. Due to also collecting the premium, this could result in a total return of 23.60% at the April 4th expiration (excluding any dividends and before broker commissions). It’s important to consider the potential for significant upside if RKLB shares appreciate, making a thorough review of the company’s historical trading data and fundamentals essential.

Below is a chart illustrating Rocket Lab USA Inc’s twelve-month trading history, with the $31.00 strike price denoted in red:

Notably, the $31.00 strike price represents about a 12% premium to the current trading price, indicating it is out-of-the-money by this percentage. There’s a 50% chance that the covered call contract could expire worthless, allowing the investor to retain both their shares and the collected premium. Current data suggests this scenario is plausible, and Stock Options Channel will track these odds and provide updates on our website. Should the covered call contract expire worthless, the premium would equate to an 11.73% additional return for the investor, or an 87.44% annualized return, also referred to as the YieldBoost.

Understanding Volatility

Both the put and call contracts have an implied volatility of approximately 113%. However, we calculate the actual trailing twelve-month volatility, factoring in the last 250 trading days alongside today’s price of $27.71, to be 77%. For more insights into additional put and call options worth exploring, visit StockOptionsChannel.com.

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