Investors in the Invesco QQQ Trust (symbol: QQQ) saw new options become available today for the March 22 expiration. But stock options channelOur YieldBoost formula has looked at the top and bottom of the QQQ options chain for new contracts dated March 22nd and identified one put and one call contract of particular interest.
The current bid for the put contract at the strike price of $292.00 is $3.95. If an investor were open to selling that contract, they are committed to buying the stock at $292.00, but will also collect a premium based on the cost of the shares at $288.05 (before broker commissions). For an investor already interested in buying shares of QQQ, that may represent an attractive option for paying $297.66/share today.
Because the $292.00 strike represents about a 2% discount to the stock’s current trading price (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract will expire worthless. Current analytical data (including Greek and implied Greek) suggest that the current probability of this happening is 99%. Stock Options Channel will track those odds over time to see how they change, publishing charts of those numbers on our website. Contract details page for this contract, Should the contract expire worthless, the premium would represent a 1.35% return on the cash commitment, or 35.37% annualized – we call it at the Stock Options Channel. yield boost,
Below is a chart showing the last twelve months trading history of Invesco QQQ Trust, and highlighting in green where the $292.00 strike is located relative to that history:
Turning to the call side of the options chain, the current bid for the call contract at the $301.00 strike price is $4.58. If an investor wanted to buy shares of QQQ stock at the current price level of $297.66/share, and then sell-to-open that call contract as a “covered call”, they would be able to sell the stock at $301.00. Committed. Considering the call seller, the premium will also be collected, which will drive a total return (excluding dividends, if any) of 2.66% if the stock closes on March 22 expiry (before broker commission). Of course, if QQQ shares actually soar, a lot of upside could be had, which is why it’s important to study the business fundamentals as well as look at the past twelve-month trading history for Invesco QQQ Trust. It happens. Below is a chart showing the QQQ’s trading history over the past twelve months, with the $301.00 strike highlighted in red:
Considering the fact that the $301.00 strike represents about a 1% premium to the stock’s current trading price (in other words it is out-of-the-money by that percentage), there is also the possibility that The covered call contract expires worthless, in which case the investor will retain both his share of the stock and the premium collected. Current analytical data (including Greek and implied Greek) suggest that the current probability of this happening is 99%. under our website Contract details page for this contractStock Options Channel will track those odds over time to see how they change and publish a chart of those numbers (the options contract’s trading history will also be charted). Should the covered call contract expire worthless, the premium would represent a 1.54% boost to the additional return to the investor, or 40.24% annualized, which we yield boost,
Meanwhile, we calculate the realized trailing twelve-month volatility (considering today’s price of $297.66 along with the closing prices of the last 251 trading days) to be 31%. For more Put and Call option contract ideas worth watching, visit the StockOption channel.
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