As investors peruse the options market for Monster Beverage Corp (Symbol: MNST) this week, a tantalizing opportunity emerges. New options expiring on May 17th have entered the arena. Stock Options Channel’s YieldBoost formula has scrutinized the MNST options chain, unveiling a put and call contract worthy of attention.
Exploring the Put Option
At a strike price of $57.50, the put option captivates with a bid of $1.15. By opting to sell-to-open this put contract, an investor commits to buying the stock at $57.50, augmented by the premium received, effectively setting the cost basis at $56.35. A tempting prospect for those eyeing MNST shares at a current price of $59.59.
By residing 4% below the current stock price, the $57.50 strike stands out as an enticing out-of-the-money prospect. Statistics suggest a 70% likelihood of the put contract expiring worthless. If so, the premium spells a 2.00% return on the cash investment, equivalent to 11.59% annualized — a feature Stock Options Channel dubs the YieldBoost.
The chart showcasing Monster Beverage Corp’s trailing twelve-month trading history puts the $57.50 strike into perspective, accentuated in green.
An Insight into the Call Option
Moving to the calls side, the $62.50 strike call option commands a bid of $1.40. Purchase of MNST shares at $59.59, coupled with selling-to-open the call as a “covered call” at $62.50, beckons a total return of 7.23% if the stock gets called away by May 17th. Despite potential upsides, prudent examination of MNST’s trading history and fundamental dynamics is indispensable.
With the $62.50 strike representing a 5% premium to the current stock price, the covered call may expire worthless, holding a 62% probability. In such an event, the investor retains both the stock shares and the premium, offering a 2.35% supplementary return, or 13.61% annualized, known to Stock Options Channel as the YieldBoost.
Implied volatility gauges at 25% for the put option and 23% for the call option. Actual trailing twelve-month volatility stands at 21% amid the stock’s journey. Those seeking more put and call options insights can explore StockOptionsChannel.com.
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