Traders delving into Amazon.com Inc (Symbol: AMZN) witnessed the commencement of trading today for the August 30th expiration. Stock Options Channel, renowned for its astute analyses, unearthed intriguing developments in the AMZN options chain for these newly minted August 30th contracts. Of notable mention are one put and one call contract, both presenting unique propositions worthy of consideration.
Exploring Put Options
At a striking $195.00, the put contract beckons with a bid of $7.65. Should an investor opt to sell-to-open this put contract, they embark on an agreement to acquire the stock at $195.00, all the while reaping the premium, leading to a reduced cost basis of $187.35 per share (excluding any broker commissions). For those eyeing an entrance into AMZN, this strategy could emerge as an enticing avenue compared to today’s trading price of $196.56 per share.
Given that the $195.00 strike equates to a roughly 1% discount from the prevailing stock price, this put contract falls marginally out-of-the-money. There exists a likelihood, captured by current analytical data, with greeks and implied greeks, indicating a 58% probability of the put contract expiring worthless. Stock Options Channel will meticulously monitor these odds, encapsulating the evolving landscape in a visual chart on the website, under the contract detail section. In the event of a fruitless expiration, the premium bestowed renders a 3.92% yield on the financial commitment, or a robust 28.64% on an annual basis, a metric affectionately dubbed the YieldBoost.
Navigating Call Options
Venturing into the calls domain, the call contract poised at the $200.00 strike features a current bid of $9.35. An investor procuring AMZN shares at the present $196.56/share price, then venturing into selling the call contract via a “covered call” maneuver, commits to vend the stock at $200.00. An amalgamation of the aforementioned actions, encompassing the premium collection, yields a total return of 6.51% when the stock gets summoned away upon August 30th expiration (excluding dividends, if any). However, soaring possibilities abound, should AMZN shares rally substantially. A meticulous study of Amazon.com Inc’s trailing twelve month trading history, alongside an examination of its business fundamentals, becomes imperative. The chart displaying AMZN’s twelve month trading trajectory spotlights the $200.00 strike in an eye-catching red hue.
The $200.00 strike signifies an approximate 2% premium relative to the present trading value of the stock, defining it marginally out-of-the-money. Pivotal to note is the potential for the covered call contract to lapse into worthlessness, allowing the investor to retain both their stock shares and the acquired premium. Current analytical data, incorporating greeks and implied greeks, unveil a 50% likelihood of this outcome. Stock Options Channel remains steadfast in monitoring these probabilities through time, encapsulating the metamorphosis in a graphical representation, with the option contract’s trading history also laid bare. A null expiratory outcome would yield a 4.76% supplementary return, aptly characterized as the YieldBoost, boasting a 34.72% annualized metric.
The implied volatility stands at 34% for the put contract, while the call contract mirrors a slight uptick to 35%. Notably, the actual trailing twelve month volatility, accounting for the last 251 closing values and the current $196.56 price, settles at 27%. For an array of put and call options contract suggestions worth exploring, a visit to StockOptionsChannel.com is a wise route to embark upon.