Oh, the intriguing world of options trading never ceases to amaze. Today, we delve into Alibaba Group Holding Ltd’s (BABA) new options available for trading until the November 8th expiration. Options – a playground for the daring, a puzzle for the calculated – offer investors a myriad of strategies to dance with risk and reward.
Exploring Put Options
Let’s begin with the put options, shall we? Picture this: a put contract beckons at the $100.00 strike price, tantalizing investors with a current bid of $2.81. Selling-to-open this contract means pledging to buy the stock at $100.00, all the while pocketing the premium, effectively lowering the cost basis to $97.19. It’s like grabbing a bargain at the market, reducing entry costs.
With the $100.00 strike prancing at a 3% discount from the current stock price, the put contract hangs in a sweet spot. There’s a 62% chance it could expire worthless, offering a 2.81% return on the investment, or a juicy 23.83% annualized yield. Quite the tempting dance, wouldn’t you agree?
Casting a gaze at the trailing twelve months of Alibaba’s trading history unveils where the $100.00 strike resides – a green land amidst the volatile seas of market moves.
Embarking on Call Options
Now, let’s shift our gaze to the calls side of the option chain. Behold the call contract at the $107.00 strike, beckoning with a bid of $2.65. Here, investors can adopt a “covered call” stance, committing to sell the stock at $107.00 should they choose to. The allure lies in a potential total return, excluding dividends, of 6.22% if the stock is called away at the November 8th expiration.
If the $107.00 strike hovers at a 4% premium to the current stock price, could this be a siren’s call towards potential riches? There’s a 59% chance the call contract might vanish into the market mists, leaving the investor with both their shares and the collected premium, a sweet reward for the patient observer.
Implied volatility whispers at 37% for the put contract and 38% for the call contract, adding a dash of excitement to the options ballet. Meanwhile, the trailing twelve-month volatility casts a steadier shadow at 35%, grounding us in the unpredictable rhythms of the market.
As we drift through the intricate dance of options trading, it’s essential to keep a keen eye on historical patterns, fundamental insights, and the ever-shifting winds of the market. For those hungering for more options adventures, StockOptionsChannel.com beckons with more intriguing ideas.
