Interesting NFLX Put and Call Options for July 15
IInvestors at Netflix Inc (Ticker: NFLX) saw new options start trading today, for the July 15 expiry. One of the key data points that goes into the price an option buyer is willing to pay is time value, so with 172 days to expiration, new trading contracts represent a possible opportunity for sellers of puts or calls to obtain a higher premium than would be available for contracts whose expiration is closer. AT Stock Options Channel, our YieldBoost formula scanned the NFLX options chain from top to bottom for new contracts on July 15 and identified one put contract and one call contract of particular interest.
The contract to sell at the strike price of $350.00 has a current bid of $36.00. If an investor were to sell to open this put contract, they agree to buy the stock at $350.00, but will also collect the premium, placing the cost base of the stock at $314.00 (before brokerage commissions ). For an investor already interested in buying shares of NFLX, this could represent an attractive alternative to paying $354.13/share today.
Since the strike price of $350.00 represents a discount of approximately 1% from the current stock price (in other words, it is out of play by that percentage), it is also possible that the contract of sale expires worthless. Current analytical data (including Greeks and implied Greeks) suggests that the current chance of this happening is 57%. Stock Options Channel will track these odds over time to see how they change, posting a table of these numbers on our website under contract detail page for this contract. If the contract expires worthless, the premium would represent a return of 10.29% on the cash commitment, or 21.83% annualized – at Stock Options Channel, we call this the Yield increase.
Below is a chart showing Netflix Inc’s last twelve months trading history, and highlighting in green where the $350.00 strike falls in relation to that history:
On the call side of the options chain, the call contract at the strike price of $360.00 has a current bid of $37.00. If an investor were to buy NFLX stock at the current price level of $354.13/share and then sell to open this call contract as a “covered call”, they are committing to sell the stock at 360 $.00. Since the call seller will also collect the premium, this would result in a total return (excluding dividends, if any) of 12.11% if the stock is called at the July 15 expiration (before broker commissions). ). Of course, a lot of upside could potentially be left on the table if NFLX stock really spikes, which is why it becomes important to look at Netflix Inc’s trading history for the past twelve months, as well as Study the fundamentals of business. Below is a chart showing NFLX’s trading history over the past twelve months, with the $360.00 strike highlighted in red:
Considering that the strike price of $360.00 represents a premium of approximately 2% to the current stock price (in other words, it is out of the price by that percentage), it It is also possible for the covered call contract to expire worthless, in which case the investor would keep both his shares and the premium collected. Current analytical data (including Greeks and implied Greeks) suggests that the current chance of this happening is 47%. On our website under contract detail page for this contract, Stock Options Channel will track these odds over time to see how they change and publish a chart of these numbers (the trading history of the option contract will also be charted). If the covered call contract expires worthless, the premium would represent a 10.45% increase in incremental return to the investor, or 22.18% annualized, what we call the Yield increase.
The implied volatility in the sample sell contract, as well as the sample buy contract, is approximately 49%.
Meanwhile, we calculate the actual volatility for the last twelve months (considering the closing values for the last 252 trading days as well as today’s price of $354.13) at 39%. For more put and call options contract ideas worth considering, visit StockOptionsChannel.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.