Exploring Put Options
Today marks the unveiling of new options for Netflix Inc. investors under the May 24th expiration date. Specifically, a put contract at the $630.00 strike price caught the eye of many, with a compelling bid of $32.60. Should an investor opt to sell-to-open this put contract, they commit to buying the stock at $630.00 but stand to gain the premium, adjusting the cost basis to $597.40 (pre-broker commissions). This presents a tantalizing alternative for those eyeing NFLX shares at $634.15 apiece today.
With the $630.00 strike boasting roughly a 1% discount from the current trading value (essentially being out-of-the-money by that percentage), there exists a possibility that the put contract may expire fruitless. Statistical models show a 57% chance of this outcome. Stock Options Channel will monitor these odds, showcasing the data evolution over time on their site. An evanescent contract could yield a 5.17% return on cash outlay, or a tantalizing 37.77% annually – a phenomenon that Stock Options Channel affectionately terms the YieldBoost.
Insights on Call Options
On the converse side of the option spectrum, the call contract at the $640.00 strike point garners attention with a $36.20 bid. For an investor procuring Netflix shares at the current $634.15 threshold and subsequently vending this call contract as a “covered call,” the commitment involves selling the stock at $640.00. The call seller benefits from the premium, thereby potentially netting a 6.63% total return (excluding dividends) if the stock is called away at the May 24th expiration (before broker fees).
Yet, a covered call could squander the potential windfall if NFLX shares witness a meteoric rise, highlighting the essence of understanding NFLX’s trading history over the previous twelve months. Visual aids demonstrate where the $640.00 strike lies – approximately 1% above the current trading price – with a 48% chance, as per data, of the covered call contract fizzling out. In such a scenario, the investor retains both their shares and the premium, auguring a 5.71% extra return or a luscious 41.67% on an annual basis, known fondly as the YieldBoost.
Market Insights
The implied volatility for both the put and call contracts looms at roughly 41%, resonating with the market’s fervor. Conversely, the actual trailing twelve-month volatility registers at 35%, rooted in the closing values of the last 250 trading days besides the current price of $634.15. For more intriguing put and call options, investors can explore StockOptionsChannel.com.
