New Options Trading Launches for Texas Roadhouse Investors
Investors in Texas Roadhouse Inc (Symbol: TXRH) witnessed the initiation of new options trading today, set to expire on July 18th. With 72 days remaining until expiration, these contracts may present an opportunity for sellers of puts or calls to earn higher premiums compared to those with nearer expiration dates.
Utilizing our YieldBoost formula at Stock Options Channel, we examined the TXRH options chain and identified a notable put and call contract. The put contract, priced at a $155.00 strike, currently has a bid of $2.05. If an investor opts to sell-to-open this put contract, they commit to buying shares at $155.00. By collecting the premium, the effective cost basis for these shares lowers to $152.95 (excluding broker commissions). For investors interested in acquiring TXRH shares, this strategy offers an attractive alternative compared to the current market price of $171.57 per share.
Given that the $155.00 strike represents an approximate 10% discount to the current trading price, there’s a potential risk for the put contract to expire worthless. Analytical data indicates that the odds of this occurring stand at 78%. Our team will continue to monitor these odds and provide updates on our website under the contract detail page. Should the contract expire worthless, the premium collected would yield a 1.32% return on the cash commitment, or an annualized rate of 6.70%, known as YieldBoost.
Below is a chart illustrating the trailing twelve-month trading history for Texas Roadhouse Inc, with the $155.00 strike price marked in green:
In examining the call side of the options chain, the call contract at the $175.00 strike shows a current bid of $7.70. Should an investor buy shares of TXRH at the prevailing price of $171.57 and then sell-to-open this call contract as a “covered call,” they commit to selling shares at $175.00. Including the premium collected, this strategy could provide a total return of 6.49% if the stock gets called away at the July 18th expiration (excluding dividends and broker commissions).
However, significant upside could be missed if TXRH shares rise sharply, emphasizing the need to analyze both the trailing twelve-month trading history and the underlying business fundamentals. Below is a chart showing TXRH’s trailing twelve-month trading history, with the $175.00 strike highlighted in red:
The $175.00 strike reflects an approximate 2% premium above the current trading price, implying a risk that the covered call contract may also expire worthless. In this case, the investor retains both their shares and the collected premium. Current analytics suggest a 51% probability of this outcome occurring. Our team will track these odds over time, providing updates and charts for this contract on our website. If the covered call contract expires worthless, the premium would contribute an extra return of 4.49%, or 22.75% annualized, designated as YieldBoost.
The implied volatility for the put contract is at 34%, while the implied volatility for the call contract is 33%. In comparison, the actual trailing twelve-month volatility, based on the last 250 trading days and today’s price of $171.57, stands at 27%. For additional insights into put and call options contract ideas, refer to Stock Options Channel.
