EBAY August 1st Options Begin Trading

An analysis by Stock Options Channel highlights potential options strategies for eBay (EBAY) investors. Selling a $76 put contract offers a 2.34% yield if it expires worthless, with a 61% probability of that outcome, while a covered call strategy selling a $78 call offers a 4.04% return if the shares are called away; if it expires worthless, the premium would represent a 3.46% boost of extra return to the investor, or 25.23% annualized. The implied volatility for the put and call contracts are 29% and 30% respectively, while the actual trailing twelve month volatility is 29%.

Analysis

The article details two options strategies for eBay Inc. (EBAY), which is currently trading at $77.55 per share. For investors seeking to acquire EBAY shares at a lower price or generate income, selling the $76.00 strike put contract, with a current bid of $1.78, presents an option. This strategy would result in an effective share cost of $74.22 if assigned, representing an approximate 2% discount to the current market price. There is a 61% probability, based on current analytical data, that this out-of-the-money put will expire worthless, in which case the seller retains the premium, realizing a 2.34% return on the cash commitment (17.10% annualized). Alternatively, for investors holding or purchasing EBAY shares, a covered call strategy involving selling the $78.00 strike call contract, bid at $2.68, is discussed. If EBAY shares are called away at the August 1st expiration, this would yield a total return of 4.04%. If this call, approximately 1% out-of-the-money, expires worthless (a 48% probability), the investor retains the shares and the premium, achieving a 3.46% yield boost (25.23% annualized). The implied volatility for the put and call options are 29% and 30% respectively, closely aligning with EBAY's actual trailing twelve-month volatility of 29%, suggesting that the option prices reflect recent historical price fluctuations accurately.

Key Decisions for Investors

• Investors considering acquiring eBay shares or seeking to lower their cost basis could evaluate selling the $76.00 strike put, which offers a potential entry point at $74.22 or a 17.10% annualized yield if the option expires unexercised.
• Current eBay shareholders or those initiating a position at $77.55 might consider the covered call strategy using the $78.00 strike to potentially generate a 3.46% income boost (25.23% annualized) if the option expires worthless, or achieve a 4.04% total return if shares are called away by August 1st, while acknowledging the cap on upside potential above $78.00.