Exploring New Possibilities
Today marks the commencement of trading for new options on Advanced Micro Devices Inc (Ticker: AMD) with an expiration date of November 8th. Investors eyeing AMD have an array of intriguing options unfolding before them today.
Unlocking Potential
One put contract that stands out is at the $165.00 strike price, currently fetching a bid of $9.40. By opting to sell-to-open this put contract, investors commit to purchasing the stock at $165.00 behind a shield of premium, effectively setting the cost basis of shares at $155.60. This strategy presents a captivating alternative for those considering a stake in AMD at a lower cost than the current trading price of $166.25/share.
Calculating Risk and Reward
The $165.00 strike carries an approximately 1% discount to the current stock price, positioning it slightly out-of-the-money. Consequently, there lies a 57% chance that the put contract may expire without value. Stock Options Channel diligently monitors these odds over time, providing investors with crucial insights. If the contract fizzles out, the premium corresponds to a 5.70% return on the cash at play or a striking 48.31% annualized – a financial feat we fondly term YieldBoost.
Visualizing Performance
An illustrative chart of AMD’s trailing twelve-month trading history underscores the relative position of the $165.00 strike, offering a tangible link to past performances.
Embracing Upside Potential
Flipping over to the calls side, the $170.00 strike call contract beckons with a bid of $9.95. For those acquiring AMD shares at the current price point of $166.25/share, selling-to-open this call contract as a “covered call” involves committing to selling the stock at $170.00. This strategic move fosters a potential total return of 8.24% upon the stock being called away at the November 8th expiration. Yet, there remains the tantalizing prospect of missing out on further gains should AMD shares soar beyond expectations.
Strategic Planning
The $170.00 strike boasts an approximate 2% premium to the current stock price, positioning it slightly out-of-the-money. Thus, there is a 50% chance that the covered call contract might fade into obscurity, leaving the investor with both their shares and the premium pocketed. Stock Options Channel meticulously tracks these odds and trends, presenting them to investors through accessible charts. A null outcome would translate into a 5.98% supplementary boost of return or a noteworthy 50.75% annualized – the renowned YieldBoost.
Delving into Volatility
Notably, the implied volatility stands at 49% for the put contract example and 50% for the call contract, contrasting the deemed trailing twelve-month volatility of 48%. For further insights on potential put and call options, a visit to StockOptionsChannel.com unveils a treasure trove of valuable ideas.
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