LUNR July 25th Options Begin Trading

Stock Options Channel analyzed options strategies for Intuitive Machines Inc (LUNR), highlighting a potential sell-to-open put strategy at the $10.00 strike, offering a cost basis of $9.84 per share and a potential 1.60% return (11.68% annualized) if the contract expires worthless, with a 66% probability. Additionally, a covered call strategy at the $11.50 strike was examined, potentially yielding a 14.89% return if the stock is called away, or a 9.19% premium boost (67.10% annualized) if the contract expires worthless, with a 44% probability; implied volatilities for the put and call options are 126% and 138% respectively, compared to a trailing twelve-month volatility of 119%.

Analysis

The article details two options strategies for Intuitive Machines Inc (LUNR), currently trading at $10.88 per share. Selling a cash-secured put at the $10.00 strike price, with a bid of $0.16, could establish a cost basis of $9.84 per share if assigned, representing an approximate 8% discount to the current price. There is a 66% statistical probability of this out-of-the-money put expiring worthless, which would yield a 1.60% return on the cash commitment, or an 11.68% annualized YieldBoost. Alternatively, for existing shareholders, selling a covered call at the $11.50 strike price, with a bid of $1.00, offers a potential total return of 14.89% if the stock is called away by the July 25th expiration. Should this out-of-the-money call expire worthless, with a 44% statistical probability, the premium collected would represent a 9.19% boost to returns, or a 67.10% annualized YieldBoost. The implied volatility for the put is 126% and for the call is 138%, both notably higher than LUNR's actual trailing twelve-month volatility of 119%, suggesting elevated option premiums possibly due to anticipated stock price movement.

Key Decisions for Investors

• Investors bullish on LUNR but seeking a lower entry point might consider selling the $10.00 strike put, understanding the obligation to purchase shares at $10.00 if the price falls, thereby achieving a $9.84 cost basis, or collecting an 11.68% annualized return if the option expires worthless.
• Current LUNR shareholders aiming to generate income and willing to cap potential upside could evaluate selling the $11.50 strike covered call, which offers a 14.89% return if called away or a significant annualized YieldBoost of 67.10% if it expires worthless, but this strategy forgoes gains above $11.50.
• Given the elevated implied volatilities (126%-138%) compared to the historical volatility (119%), investors should recognize that while option premiums are rich, the market is also pricing in a higher probability of substantial price swings, necessitating a careful assessment of LUNR's fundamentals and individual risk tolerance before employing these strategies.