Investors at Live Nation Entertainment Inc (Symbol: LYV) have seen new options become available this week for an April 2023 expiration date. One of the key inputs into the price an option buyer is willing to pay is time value. As such, with 226 days to maturity, newly available contracts represent an opportunity for put or call sellers to potentially achieve a higher than normal premium. Make it available for contracts with a closer expiry date. On the Stock Options Channel, the YieldBoost formula examined his LYV option chain for his April 2023 new contract and identified his 1 put and his 1 call contracts of particular interest.
The current bid for the put contract with a strike price of $87.50 is $9.80. If the investor sells the put contract, they promise to buy the stock for his $87.50, but also recover the premium, making the stock’s cost basis his $77.70 (before broker fees) . For investors already interested in purchasing LYV shares, this could be a more attractive alternative than currently paying $89.19 per share.
The $87.50 strike represents a discount of about 2% to the current trading price of the stock (i.e. it is out of the money by that percentage), so the put contract expires worthless There is also a possibility. Current analytical data (including Greek and implied Greek) suggest that the chance of it happening is currently 61%. The Stock Options Channel tracks these odds over time to see how they change and publishes charts of these numbers on its website under the contract details page for this contract. increase.If the contract expires at no value, the premium would be a return of 11.20% on the cash commitment, or an annualized rate of 18.09% — the stock option channel allows this to be yield boost.
Below is a chart showing Live Nation Entertainment Inc’s trading history over the last 12 months, highlighted in green where the $87.50 strike is against that history.
Looking at the call side of the options chain, the current bid for the call contract with a strike price of $92.50 is $11.40. If an investor buys his LYV shares at his $89.19/share, the current price level, and opens the call contract as a “covered call,” they sell the shares at his $92.50 I promise to Considering that the call seller also recovers the premium, if the stock were called at his April 2023 maturity (before brokerage fees), it would have resulted in a total return of 16.49% (excluding dividends, if any). increase. Of course, if LYV’s stock price surges, it could leave a lot of upside. That’s why it’s important to study the business fundamentals by looking at Live Nation Entertainment Inc’s trading history over the past 12 months. Below is a chart showing LYV’s trading history over the last 12 months, with the $92.50 strike highlighted in red.
Considering the fact that the $92.50 strike represents a premium of about 4% to the current stock trading price (i.e. it is out of the money by that percentage), if the covered call contract is then , the investor will leave his stock and premium collected. Current analytical data (including Greek and implied Greek) suggest that the chance of it happening is currently 44%. On our website under the contract details page for this contract, the Stock Options Channel tracks these odds over time to see how the odds change and chart those numbers. Publish (the trading history of the options contract is also charted). If the covered call contract expires at no value, the premium represents his 12.78% increase in additional return to the investor, or his 20.64% annualized. yield boost.
The put contract example has an implied volatility of 49%, while the call contract example has an implied volatility of 46%.
On the other hand, we calculate the actual volatility over the last 12 months (taking into account the closing prices of the last 252 trading days and today’s price of $89.19) to be 46%. Visit StockOptionsChannel.com for more interesting put and call option contract ideas.
The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.
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