First week of options trading on November 26 STNE
IInvestors in StoneCo Ltd (ticker: STNE) saw new options become available this week, for the November 26 expiration. At Stock Options Channel, our YieldBoost formula scoured the STNE options chain for new November 26 contracts and identified a put and call of particular interest.
The contract to sell at the strike price of $ 34.00 has a current bid of $ 2.40. If an investor were to sell to open this sales contract, they agree to buy the stock at $ 34.00, but will also receive the premium, putting the base price of the shares at $ 31.60 (before broker commissions ). For an investor already interested in purchasing shares of STNE, this could represent an attractive alternative to paying $ 34.46 / share today.
Since the strike price of $ 34.00 represents a discount of around 1% from the current share price (in other words, it is out of the money by that percentage), it is also possible that the sales contract expires worthless. Current analytical data (including Greeks and Greeks implied) suggests that the current chance of this happening is 57%. Stock Options Channel will monitor these quotes over time to see how they evolve, posting a chart of these numbers on our website under the contract detail page for that contract. If the contract expires worthless, the premium would represent a return of 7.06% on the cash commitment, or 52.54% annualized – at Stock Options Channel, we call that the YieldBoost.
Below is a chart showing StoneCo Ltd’s past twelve months trading history and highlighting in green the location of the $ 34.00 exercise against that history:
Turning to the calls side of the options chain, the $ 39.00 strike purchase contract has a current bid of $ 1.05. If an investor were to buy STNE shares at the current price level of $ 34.46 / share and then sell to open that purchase contract as a “covered call”, they agree to sell the share at 39. $. Since the call seller will also receive the premium, this would generate a total return (excluding dividends, if any) of 16.22% if the stock is recalled on the November 26 expiration (before broker commissions. ). Of course, a lot of benefits could be left on the table if STNE shares really soar, which is why it becomes important to look at StoneCo Ltd’s past twelve months trading history, as well as study the fundamentals of the business. Below is a chart showing STNE’s last twelve months trading history, with the strike price of $ 39.00 highlighted in red:
Considering the fact that the strike price of $ 39 represents a premium of around 13% over the current share price (in other words, it is out of the money by that percentage), it is It is also possible that the covered purchase contract will expire worthless, in which case the investor would keep both his shares and the premium received. Current analytical data (including Greeks and Greeks implied) suggests that the current chance of this happening is 99%. On our website, under the contract detail page for that contract, the Stock Options Channel will track these quotes over time to see how they change and publish a chart of those numbers (the option contract’s trading history will be also plotted). If the covered purchase contract expires worthless, the premium would represent a 3.05% increase in additional return to the investor, or 22.68% annualized, which we call the YieldBoost.
The volatility implied in the sales contract example above is 59%.
Meanwhile, we calculate the actual volatility of the past twelve months (taking into account the closing values of the last 252 trading days as well as today’s price of $ 34.46) at 46%. For more put and call option contract ideas worth considering, visit StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.