New Options Spotlight: Tarsus Pharmaceuticals Offers Strategic Opportunities
Investors in Tarsus Pharmaceuticals Inc (Symbol: TARS) are presented with fresh options as of this week, with contracts expiring on December 20th. Our YieldBoost analysis has uncovered a noteworthy put and call option that may interest those considering their investment strategies.
A Closer Look at the Put Option
The put contract with a $35.00 strike price is currently bidding at $1.10. By selling-to-open this put contract, an investor would agree to buy the stock at $35.00 while collecting the premium, effectively lowering the cost basis to $33.90, excluding broker fees. For those looking to buy shares of TARS, this offers an appealing alternative to the current market price of $36.20 per share.
This $35.00 strike represents a roughly 3% discount to today’s trading price. The likelihood of this put option expiring worthless stands at 62%, according to the latest analytical data. Should the option become worthless, the premium earned would yield a 3.14% return based on the cash commitment, translating to an annualized return of 19.43%. At Stock Options Channel, we refer to this as the YieldBoost.
Twelve-Month Trading History
Below is a chart illustrating Tarsus Pharmaceuticals Inc’s trading history over the past twelve months, with the $35.00 strike price marked in green:
Exploring the Call Option
On the call side, the contract with a $45.00 strike price currently bids at 40 cents. If an investor buys TARS shares at $36.20 and then sells this call as a “covered call,” they commit to sell the stock at $45.00 while also collecting the premium. This strategy could yield a total return of 25.41% by the December 20th expiration, excluding potential dividends and broker commissions. However, if TARS stock price rises significantly, the investor may miss out on additional gains, highlighting the importance of reviewing past trading trends and the company’s fundamentals.
Below you can see TARS’s twelve-month trading history again, with the $45.00 strike highlighted in red:
Understanding the Potential of the Call Option
The $45.00 strike is about a 24% premium over the current trading price. There’s a 64% chance this call option could expire worthless, allowing the investor to retain both their shares and the premium received. If that occurs, the premium represents a 1.10% extra return on the investment, or an annualized 6.83%, also referred to as the YieldBoost.
Implied volatility for the put option is measured at 74%, while the call option shows 91% implied volatility. In contrast, the actual trailing twelve-month volatility, based on the last 251 trading day closing values alongside today’s price of $36.20, sits at 60%. For more insights into put and call options, visit StockOptionsChannel.com.
Check Out Top YieldBoost Calls of the S&P 500 »
Additional Resources:
- Top Ten Hedge Funds Holding OXY
- NEE Split History
- Weyerhaeuser shares outstanding history
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
