Exploring Put and Call Options
Today marked the initiation of new options trading for Advanced Micro Devices Inc (AMD) with an expiration date of August 23rd. The team at Stock Options Channel delved into the AMD options chain for these new contracts, pinpointing one put and one call option that stand out.
Put Option Analysis
Focusing on the put contract set at the $160.00 strike price showcasing a $7.25 bid, investors delving into this option are signing up to procure the stock at $160.00. They also stand to acquire the premium, effectively establishing the share’s cost basis at $152.75 (prior to broker fees). For those eyeing AMD shares, this could offer a compelling alternative to the current $163.30/share rate.
The $160.00 strike represents a modest 2% markdown from the current stock price, categorizing it as out-of-the-money by that percentage and suggesting a 61% likelihood that the put contract might expire with no value. A graphic depiction of the option’s odds evolving over time is available on the Stock Options Channel website.
Call Option Analysis
On the call side, the $175.00 strike call contract, valued at $7.50, beckons investors. Those who purchase AMD shares at the existing price point of $163.30/share and proceed to execute the call contract via a “covered call,” commit to vending the stock at $175.00. This maneuver could yield a total return of 11.76% at the August 23rd expiration date, excluding dividends. However, considerable potential for stock growth could remain unutilized if AMD shares surge.
With the $175.00 strike implying a generous 7% premium above the current stock price, there is a chance that the covered call contract will lapse without value. Current data implies a 58% probability of this outcome. Stock Options Channel will monitor this trajectory and present the insights, together with a historical representation of the option’s trading history.
Comparative Analysis
The implied volatility for the put and call options stand at 47% and 50% respectively. In contrast, the actual trailing twelve-month volatility calculates to 45%, acquired from the previous 251 closing trading values alongside the present $163.30 price.
For additional potential put and call options that warrant exploration, visit StockOptionsChannel.com.
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