First Week of EXAS December 19th Options Trading

An analysis of EXACT Sciences Corp. (EXAS) options strategies, with the stock at $63.20, highlights opportunities for income generation and discounted share acquisition. Selling a $57.50 strike put for a $2.00 premium offers an effective purchase price of $55.50 (a 9% discount) with a 72% probability of expiring worthless for a 3.48% return. Alternatively, a covered call strategy, selling a $65.00 strike call for $3.90, could yield a 9.02% total return if EXAS is called away by December 19th, or a 6.17% premium if the call expires worthless (50% probability). The analysis notes implied volatilities of 54% for the put and 51% for the call, aligning with the 50% trailing 12-month volatility.

Analysis

The analysis highlights two distinct options strategies for EXACT Sciences Corp. (EXAS), currently trading at $63.20/share, focusing on either discounted share acquisition or enhanced income generation. The overall sentiment for EXAS is mildly positive, with a neutral tone in the article, and a low market impact score.

For investors aiming for a discounted entry, selling a $57.50 strike put for a $2.00 premium offers an effective purchase price of $55.50, a 9% discount. This strategy carries a 72% probability of the put expiring worthless, yielding a 3.48% return on cash commitment, or 22.26% annualized.

Alternatively, a covered call strategy involves purchasing EXAS at $63.20 and selling a $65.00 strike call for $3.90. This could generate a 9.02% total return if the stock is called away by December 19th. If the call expires worthless, a 50% probability, the investor retains the shares and a 6.17% premium boost, or 39.49% annualized.

Both the put's 54% and call's 51% implied volatilities are closely aligned with EXAS's 50% trailing twelve-month actual volatility. This consistency suggests options pricing reflects historical price movements, providing a balanced backdrop for evaluating these income-generating or discounted entry opportunities.

Key Decisions for Investors

• Consider initiating a short put strategy at the $57.50 strike to acquire EXAS shares at a 9% discount ($55.50 effective price) while collecting a 22.26% annualized premium if the option expires worthless.
• For current or prospective EXAS shareholders, evaluate a covered call strategy using the $65.00 strike to potentially achieve a 9.02% total return by December 19th or a 39.49% annualized premium income if the call expires unexercised.
• Given implied volatilities align with historical trends, assess the risk/reward of these options strategies against EXAS's fundamental outlook, acknowledging the potential for capped upside in a covered call scenario.