Investors delving into Microsoft Corporation’s (Symbol: MSFT) options market witnessed the commencement of trading for the October 4th expiration today. This engagement stirred up intriguing possibilities for option traders eyeing strategic plays in the stock.
Exploring Put Options at $420.00 Strike
One put contract at the $420.00 strike price stands out, flaunting a current bid of $7.45. Opting to sell-to-open this put provides a tempting proposition for investors; they commit to acquiring the stock at $420.00 while pocketing the premium. This move effectively reduces the cost basis of the shares to $412.55, granting a slight discount from the existing market price.
With the $420.00 strike poised approximately 1% below the stock’s current trading value, this out-of-the-money alignment sets the stage for potential expiration sans value. Analytical data, including greeks and implied greeks, hint at a 62% likelihood of this outcome. Tracking these odds over time via Stock Options Channel may reveal changing trends in the future.
Visualizing Trading History and Call Options
An illustration mapping Microsoft Corporation’s twelve-month trading journey reflects the positioning of the $420.00 strike within this historical context. This visual aid aids in contextualizing the option’s prospective performance.
Shifting focus to call options, a call contract anchored at the $435.00 strike beckons with a bid of $7.80. Initiating a covered call strategy by selling this contract post purchasing MSFT shares at the prevailing rate of $424.05 unleashes a potential total return of 4.42%. However, this approach may cap gains if the stock embarks on a soaring rally.
Given that the $435.00 strike reflects an approximate 3% premium over the current stock price, the possibility of the covered call expiring fruitlessly looms. Data indicates a 58% chance of this occurrence, signifying another opportunity to retain both stock holdings and the premium garnered.
Volatility and Future Prospects
Implied volatility for both the put and call contracts levels at around 20%. This metric signals market expectations regarding potential price movements. Further analysis of the trailing twelve-month volatility, resting at 20%, provides additional insights into Microsoft’s price behavior over an extended period.
For investors seeking to explore more option contract ideas, a visit to StockOptionsChannel.com may yield further opportunities for strategic maneuvers.