Dive into the heart of Netflix Inc’s options trading week as the stage is set for new opportunities. This week, investors welcomed the arrival of fresh options for the May 31st expiration date. Stock analysts at Stock Options Channel have combed through the NFLX options lineup for the new May 31st contracts, pinpointing one put and one call contract that stand out from the sea of possibilities.
Peering at the options table, we find a put contract sitting at the $625.00 strike price with a current bid of $33.75. An investor who chooses to sell-to-open this put contract is essentially agreeing to acquire the stock at $625.00. However, in return, they will pocket the premium, thus setting the cost basis of the shares at $591.25 (before any commissions from brokers). For an investor eyeing NFLX shares, this maneuver presents a tantalizing alternative to the current market price of $628.27 per share.
The $625.00 strike marks a roughly 1% markdown from the stock’s present trading value. This puts the put contract out-of-the-money by that percentage, indicating a 56% chance that the put contract might expire fruitlessly. Stock Options Channel will closely monitor these odds over time, producing a detailed chart of these fluctuations on their website. If the contract does lapse without value, the premium would yield a 5.40% return on the cash put up, or an annualized 40.22% – a phenomenon Stock Options Channel fondly labels the ‘YieldBoost’.
Skimming the waves of the option chain, we find a call contract perched at the $635.00 strike with a current bid of $35.40. For a gamer ready to walk the talk, purchasing NFLX shares at the ongoing rate of $628.27 each and subsequently executing a ‘covered call’ by selling-to-open this contract, commits them to vending the stock at $635.00. By embracing the call contract, they clinch a handsome return (minus dividends), estimated at 6.71% should the stock be called away come the May 31st expiration (before the broker demands their cut).
Of course, if NFLX shares surge to new heights, there’s potential room for more gains left untapped. Hence, a peek into Netflix Inc’s preceding twelve months of trading history and delving into its business core proves pivotal. A chart unveiling NFLX’s last year’s trading narrative showcases the $635.00 strike encased in a fiery red glow.
The $635.00 strike signals an approximate 1% premium over the current stock value. This nudges the covered call contract marginally out-of-the-money by that percentage, warranting a 48% probability that the contract might perish bare. Stock Options Channel will keep tabs on this evolving scenario, assembling a visual representation of these intricate stats on their site. If the covered call contract fails to blossom, the premium serves as a 5.63% bonus return to the investor or 41.97% annualized – a bonus dubbed the ‘YieldBoost’ by these savvy options analysts.
While the implied volatility stands at 42% for the put contract and 41% for the call contract, the actual trailing twelve-month volatility figures to 34% after a deep, rigorous analysis perusing the last 251 closing values and the present price pegged at $628.27. For further brain fodder on potential put and call options, worth a curious peek, swing by StockOptionsChannel.com.
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