Exploring Put Options for AAPL
Today marks the initiation of new options trading for Apple Inc (AAPL), specifically for the November 29th expiration. Investors diving into the world of options trading have an array of choices before them. Notably, the put contract at the $225.00 strike price is drawing attention, boasting a current bid of $6.40. Should an investor decide to sell-to-open this put contract, they would be making a commitment to buy the stock at $225.00. However, in this scenario, not all is lost. By pocketing the premium associated with the put contract, the cost basis for the shares would stand at $218.60 (pre-broker commission). For those eyeing AAPL, this may present an intriguing proposition, providing a potential alternative to purchasing shares at the current market rate of $228.29.
As the $225.00 strike sits at roughly a 1% discount to the present stock price, there arises a chance that the put contract could expire worthless. Initial data points indicate a 60% chance of this outcome occurring. This data, alongside various metrics like greeks and implied greeks, will be closely monitored by Stock Options Channel over time. If the contract does expire worthless, the premium will yield a 2.84% return on the cash laid out, translating to an annualized return of 20.75% – a metric christened the YieldBoost by Stock Options Channel.
Considering Call Options for AAPL
Shifting gears to the call side, a call contract at the $230.00 strike price is enticing investors with a current bid of $7.75. Imagine an investor opting to procure AAPL shares at the current market price of $228.29 per share and subsequently engaging in a “covered call” strategy by selling-to-open the $230.00 strike call contract. By doing so, they would be committing to selling the stock at $230.00. This maneuver, coupled with the premium received, could generate a total return of 4.14% if the stock is called away at the November 29th expiration (exclusive of any dividends). Yet, the quandary persists – might substantial potential gains be forsaken if AAPL rallies? Delving into AAPL’s historical trading patterns over the past year and delving into its business fundamentals becomes imperative in such scenarios. A chart depicting AAPL’s twelve-month trading history, with the $230.00 strike highlighted, paints a vivid picture.
With the $230.00 strike poised at a 1% premium to the current stock price, there is the lurking chance that the covered call contract might expire fruitlessly. Present data hints at a 50% probability of this event materializing. Stock Options Channel will meticulously trace these odds over time, furnishing numerical snapshots for investors to peruse. Should the covered call contract go gently into the night, the premium garnered would bestow a supplementary 3.39% return to the investor, equating to an annualized gain of 24.76% – a phenomenon termed the YieldBoost by industry pundits.
Exploring the implied volatility, the put contract boasts a 26% rating, while its call counterpart sits at 25%. Meanwhile, the tangible trailing twelve-month volatility, blending the last 251 closing values with today’s price of $228.29, registers at 23%. For a plethora of put and call options concepts warranting examination, peruse StockOptionsChannel.com for further enlightenment.
Before navigating away, do ponder the historical volatility and implied volatility metrics, as they undoubtedly sway the calculus surrounding options trading.