Interesting BIIB Put And Call Options For September 12th

The article analyzes two options strategies for Biogen (BIIB) shares, highlighting potential income generation. It details selling an out-of-the-money $130 put option, which could yield a 16.65% annualized return (YieldBoost) if it expires worthless, with a 65% probability. Additionally, it examines selling an out-of-the-money $138 covered call, offering a potential 17.02% annualized return if it expires worthless (56% probability) or a 6.43% return if the stock is called away. The analysis notes that implied volatilities for these options are slightly above BIIB's historical volatility.

Analysis

The provided text details two distinct options-based income strategies for Biogen Inc. (BIIB) stock, which is currently trading at $132.15 per share. The first strategy involves selling an out-of-the-money put option at a $130 strike price. This generates an immediate premium of $2.55, effectively lowering the potential purchase price to a cost basis of $127.45. Analytical models suggest a 65% probability that this put option will expire worthless, which would result in a 1.96% return on the cash commitment, or a 16.65% annualized yield. The second strategy is a covered call for existing shareholders, involving the sale of a $138 strike call option for a $2.65 premium. This strategy offers a potential total return of 6.43% if BIIB's stock is called away at expiration, but caps further upside. The probability of this call expiring worthless is 56%, which would provide a 2.01% return boost, or a 17.02% annualized yield. Critically, the implied volatility for the put (30%) and call (33%) are both slightly elevated compared to Biogen's trailing twelve-month historical volatility of 29%, indicating that option sellers are currently being compensated with richer premiums relative to recent price behavior.

Key Decisions for Investors

• Investors with a bullish outlook on Biogen who seek a lower entry point could consider selling the $130 put, which offers a potential acquisition price of $127.45 or a 16.65% annualized yield if the option expires worthless.
• Current BIIB shareholders aiming to generate income could evaluate selling the $138 covered call to capture a 17.02% annualized yield, but must be willing to cap their total return at 6.43% and forgo any share price appreciation above $138 by expiration.
• Traders should recognize that the elevated implied volatility (30-33%) relative to historical volatility (29%) makes selling options on BIIB currently attractive, though this also signals heightened expectations for future price swings.