Exploring Put Options
Today marks the initiation of trading for new options set to expire on June 14th, offering investors a chance to delve into Alibaba Group Holding Ltd (Symbol: BABA). Among the new June 14th contracts, a put contract at the $79.00 strike price has stirred particular interest, presenting an intriguing opportunity for potential investors.
An investor eyeing the $79.00 strike price put contract at a current bid of $2.99 could contemplate selling-to-open this contract. By doing so, they would commit to acquiring the stock at $79.00, offset by collecting the premium. This approach could lower the cost basis of the shares to $76.01, offering a compelling alternative to the current market price of $80.73/share.
Notably, the $79.00 strike represents a 2% discount from the prevailing trading price, positioning the put contract marginally out-of-the-money. The accompanying analytical data hints at a 58% likelihood of the put contract expiring unused. Stock Options Channel will continue to monitor these odds, charting the probabilities over time for investor reference.
Evaluating Call Options
On the calls side, the $85.00 strike price call contract presents another avenue for investors to explore. With a current bid of $2.35, investors could opt to purchase BABA shares at $80.73/share and subsequently sell-to-open the call contract, committing to selling at $85.00. This “covered call” strategy, coupled with premium collection, could yield a total return of 8.20% if the stock is called away at the June 14th expiration.
Visualizing BABA’s trading history over the last twelve months, the $85.00 strike stands as a 5% premium over the current trading price, positioning the call contract out-of-the-money. Data suggests a 63% chance of the covered call contract expiring unused. Stock Options Channel will meticulously track these odds, offering investors insights as probabilities evolve over time.
Financial Analytics and Volatility Insights
The implied volatility for the put contract example hovers around 36%, while the call contract reflects a slightly higher 41% implied volatility. Delving deeper, the trailing twelve-month volatility, factoring in the last 251 trading days and the current price of $80.73, settles at 36%.
For discerning investors seeking more options contract ideas, StockOptionsChannel.com emerges as a valuable resource. Navigating the intricate landscape of options trading demands careful consideration of risk and reward dynamics, underpinned by comprehensive analytics and prudent decision-making.