First Week of November 21st Options Trading For CRISPR Therapeutics (CRSP)

The article analyzes options strategies for CRISPR Therapeutics AG (CRSP), detailing a $62.50 strike put contract with a $6.10 bid, which offers a potential effective share acquisition at $56.40 or a 9.76% premium return (56.51% annualized) if it expires worthless (57% probability). Concurrently, a $65.00 strike covered call, bidding $5.40, provides a potential 10.33% total return if the stock is called away, or an 8.46% premium (49.00% annualized) if it expires worthless (49% probability). These out-of-the-money options present structured opportunities for investors to either target a lower entry point or enhance yield on CRSP shares, noting implied volatilities of 65% for puts and 60% for calls against a 59% actual trailing volatility.

Analysis

The provided text offers a tactical analysis of two specific options strategies for CRISPR Therapeutics AG (CRSP), focusing on income generation and disciplined entry rather than a fundamental corporate outlook. For investors looking to acquire shares, selling the $62.50 strike put is presented as an alternative to a direct market purchase. This strategy offers an effective cost basis of $56.40 if assigned, a notable discount to the current $63.81 price, or a 9.76% return on cash (56.51% annualized) if the option expires worthless, an event with a 57% probability. For existing shareholders, a covered call at the $65.00 strike is detailed as a yield enhancement tool. This generates an immediate 8.46% premium (49.00% annualized) and results in a 10.33% total return if the stock is called away, but caps upside potential. The analysis highlights a notable volatility dynamic: the implied volatility on the put (65%) and call (60%) are elevated compared to the trailing twelve-month actual volatility of 59%, suggesting options are pricing in higher-than-historical price swings and making premium-selling strategies relatively attractive.

Key Decisions for Investors

• For investors with a neutral-to-bullish outlook seeking to initiate a position, selling the cash-secured put at the $62.50 strike offers a dual benefit: either acquiring CRSP shares at an effective cost basis of $56.40 or generating a 56.51% annualized return if the option expires worthless.
• Current CRSP shareholders with a moderately bullish or neutral short-term view could implement the covered call strategy at the $65.00 strike to generate immediate income, but must accept that this caps total return at 10.33% and forgoes any upside beyond $65.00 before expiration.
• The elevated implied volatility, particularly on the put contract at 65% versus the 59% historical volatility, indicates that option premiums are rich, favoring sellers of volatility; however, these trades are tactical and should be executed only if they align with an investor's independent fundamental view on CRSP, which is not provided.