Direxion TECL Options Trading: Key Insights for Investors
Investors in Direxion Shares ETF Trust – Daily Tech Bull 3X Shs (Symbol: TECL) have the opportunity to explore new options that began trading this week, set for expiration on May 16th. Our YieldBoost formula, sourced from Stock Options Channel, identifies critical put and call contracts within the TECL options chain.
Put Contracts Offer Discounted Purchase Opportunity
The put contract at the $50.00 strike price currently has a bid of $3.10. Selling to open this put contract commits the investor to buy TECL stock at $50.00 while also collecting the premium. This strategy effectively brings the investor’s cost basis to $46.90 per share (excluding broker fees), appealing to those looking to buy TECL shares at a discount from the current trading price of $55.33.
This $50.00 strike price represents a discount of about 10% from the current market price, making it out-of-the-money by that margin. Analytical data indicates a 75% probability that this put contract may expire worthless. Stock Options Channel will monitor these odds and publish updates on the contract detail page. If the contract does expire worthless, the premium collected would yield a 6.20% return on cash committed, or 49.20% annualized—referred to as the YieldBoost.
Call Contracts Present a Potential Return
On the call side, the $57.00 strike price contract has a current bid of $6.90. Investors buying shares of TECL at the current level of $55.33 and simultaneously selling to open this call as a “covered call” would be agreeing to sell the stock at $57.00. With the premium added in, this strategy could result in a total return of 15.49% if the stock is called away at the expiration (not including any potential dividends or broker fees).
However, investors should consider that substantial upside could remain if TECL shares appreciate significantly. Analyzing the stock’s trailing twelve-month trading history is essential for understanding potential risks and rewards. Below, a chart illustrates TECL’s trading history, highlighting the $57.00 strike in red:
The $57.00 strike stands at an approximate 3% premium to the current stock price, indicating it is also out-of-the-money by that percentage. The chances of this covered call contract expiring worthless are currently assessed at 41%. Stock Options Channel will track these figures over time as well. Should this contract expire worthless, the premium would equate to a 12.47% additional return for the investor, or an annualized rate of 98.95%—also termed a YieldBoost.
Market Volatility Insights
Implied volatility for the put contract is at 84%, while the call contract stands at 76%. In contrast, the historical volatility, calculated from the previous 250 trading days alongside the current price of $55.33, is at 73%. For further options contract ideas, 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.
