Exploring November 29th Options for Amazon.com (AMZN)
Investors engaging with Amazon.com Inc (Symbol: AMZN) witnessed the initiation of trading today for the November 29th expiration. Delving into the realm of possibilities, our YieldBoost formula has meticulously scrutinized the AMZN options chain, unveiling one put and one call contract that stand out amidst the trading hubbub.
Unveiling the Put Contract
Amidst the hustle and bustle of the trading floor, the put contract at the $185.00 strike price grasps the attention with a current bid of $7.40. An investor, braving the storm, opting to sell-to-open this put contract, pledges to purchase the stock at $185.00. However, a silver lining in such a transaction would be the collection of a premium, which would nudge the cost basis of the shares down to $177.60 (pre-broker commissions). For an investor eyeing AMZN shares keenly, this might emerge as an appealing avenue compared to the present $186.34/share valuation.
Evaluating the Intrinsic Value
The $185.00 strike, symbolizing an approximate 1% discount from the stock’s current trading price — colloquially known as being “out-of-the-money” by that margin — signifies the potential for the put contract to expire in futility. Statistical analyses (engulfing both greeks and implied greeks) intimate that the current odds of this occurrence stand at 58%. Our team at Stock Options Channel will vigilantly monitor these odds over time, cascading the evolving story through charted reflections on our platform. Should this contract meet its demise inconsequentially, the pocketed premium would chant a 4.00% return on the cash intervention, or a 29.18% annualized return — a gem we affectionately refer to as the “YieldBoost.”
Navigating the Call Terrain
Shifting the lens towards the calls precinct of the option chain, the call contract at the $195.00 strike price beckons with a current bid of $6.30. Upon embarking on a journey to procure AMZN shares at $186.34/share and subsequently diving into selling-to-open this call contract as a “covered call,” an investor consents to vend the stock at $195.00. In this scenario, the call seller would also receive the premium enlightening the shores to a total return (sans dividends) of 8.03% if the stock is summoned away by the November 29th expiration (pre-broker commissions).
Embracing Upside Potential
Mind you, a smidgen of caution shrouds the universe of covered call contracts; if the $195.00 strike — embodying an approximate 5% premium to the current stock value, AKA “out-of-the-money” by that measure — winds up languishing in worthlessness, the investor shall retain both their shares and the garnered premium. The existing analytical evidence pertaining to these events utters a 59% chance of such a scenario materializing. On the domain of Stock Options Channel, we solemnly vow to sketch the trajectory of these odds over time, illuminating the constellation of listings through numerical articulations. In the case of this call contract whispering its last breath fruitlessly, the enclosed premium would translate to a 3.38% heightening of returns for the investor, or a 24.66% annualized return, our dear “YieldBoost” moniker shines through once more.
Seeking Stability Amidst Volatility
The implied volatility tucked within both the put and call contract examples peers at approximately 34%. Meanwhile, the tangible trailing twelve-month volatility — contemplating the last 251 trading sessions’ closing tints coupled with today’s $186.34 price point — respectfully unfolds at 28%. For those thirsty for more put and call option endeavors to consider, may your sails veer towards the horizon of StockOptionsChannel.com.
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