Traders in Western Digital Corp (Image: WDC) noticed new choices turn into obtainable in the present day, for the January 2025 expiration. At Stock Options Channel, our YieldBoost method has appeared up and down the WDC choices chain for the brand new January 2025 contracts and recognized one put and one name contract of specific curiosity.
The put contract on the $62.00 strike value has a present bid of $1.75. If an investor was to sell-to-open that put contract, they’re committing to buy the inventory at $62.00, however may even accumulate the premium, placing the fee foundation of the shares at $60.25 (earlier than dealer commissions). To an investor already all in favour of buying shares of WDC, that might signify a horny various to paying $64.93/share in the present day.
As a result of the $62.00 strike represents an approximate 5% low cost to the present buying and selling value of the inventory (in different phrases it’s out-of-the-money by that share), there may be additionally the chance that the put contract would expire nugatory. The present analytical knowledge (together with greeks and implied greeks) recommend the present odds of that occuring are 64%. Inventory Choices Channel will observe these odds over time to see how they modify, publishing a chart of these numbers on our web site beneath the contract detail page for this contract. Ought to the contract expire nugatory, the premium would signify a 2.82% return on the money dedication, or 23.96% annualized — at Inventory Choices Channel we name this the YieldBoost.
Beneath is a chart exhibiting the trailing twelve month buying and selling historical past for Western Digital Corp, and highlighting in inexperienced the place the $62.00 strike is positioned relative to that historical past:
Turning to the calls aspect of the choice chain, the decision contract on the $66.00 strike value has a present bid of $1.01. If an investor was to buy shares of WDC inventory on the present value stage of $64.93/share, after which sell-to-open that decision contract as a “coated name,” they’re committing to promote the inventory at $66.00. Contemplating the decision vendor may even accumulate the premium, that may drive a complete return (excluding dividends, if any) of three.20% if the inventory will get referred to as away on the January 2025 expiration (earlier than dealer commissions). In fact, lots of upside may probably be left on the desk if WDC shares actually soar, which is why wanting on the trailing twelve month buying and selling historical past for Western Digital Corp, in addition to learning the enterprise fundamentals turns into vital. Beneath is a chart exhibiting WDC’s trailing twelve month buying and selling historical past, with the $66.00 strike highlighted in purple:
Contemplating the truth that the $66.00 strike represents an approximate 2% premium to the present buying and selling value of the inventory (in different phrases it’s out-of-the-money by that share), there may be additionally the chance that the coated name contract would expire nugatory, during which case the investor would maintain each their shares of inventory and the premium collected. The present analytical knowledge (together with greeks and implied greeks) recommend the present odds of that occuring are 53%. On our web site beneath the contract detail page for this contract, Inventory Choices Channel will observe these odds over time to see how they modify and publish a chart of these numbers (the buying and selling historical past of the choice contract may even be charted). Ought to the coated name contract expire nugatory, the premium would signify a 1.56% enhance of additional return to the investor, or 13.20% annualized, which we discuss with because the YieldBoost.
The implied volatility within the put contract instance is 45%, whereas the implied volatility within the name contract instance is 38%.
In the meantime, we calculate the precise trailing twelve month volatility (contemplating the final 251 buying and selling day closing values in addition to in the present day’s value of $64.93) to be 37%. For extra put and name choices contract concepts price , go to StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
