Interesting EBAY Put And Call Options For December 19th

An analysis by Stock Options Channel highlights potential options strategies for eBay (EBAY). Selling a $67.50 put offers a 5.63% return if it expires worthless, while a covered call strategy at $72.50 could yield 9.45% if the stock is called away, or an 8.88% return if it expires worthless; implied volatilities for the put and call are 35% and 33% respectively, compared to the trailing twelve month volatility of 29%.

Analysis

The article details two specific options strategies for eBay Inc. (EBAY), currently trading at $72.09 per share. Selling the $67.50 strike put contract, which is approximately 6% out-of-the-money, could allow an investor to collect a $3.80 premium, leading to an effective purchase price of $63.70 if assigned, or a 5.63% return (9.97% annualized YieldBoost) if the put expires worthless; current analytics suggest a 67% probability of this latter outcome. Alternatively, for investors holding or acquiring EBAY shares, selling the $72.50 strike call contract (approximately 1% out-of-the-money) for a $6.40 premium as a covered call could yield a total return of 9.45% if the stock is called away by the December 19th expiration. If this call expires worthless, an event with a 44% probability, the investor retains the shares and the premium, representing an 8.88% YieldBoost (15.73% annualized). Notably, the implied volatility for the put is 35% and for the call is 33%, both exceeding the stock's trailing twelve-month actual volatility of 29%, suggesting option premiums may be relatively elevated.

Key Decisions for Investors

• Investors interested in acquiring EBAY at a discount to the current $72.09 price could consider selling the $67.50 put, aiming for an effective cost basis of $63.70 or a 5.63% premium yield if the stock remains above the strike.
• Current EBAY shareholders or those purchasing shares could evaluate writing the $72.50 covered call to generate income, potentially achieving a 9.45% return if called away, or an 8.88% premium enhancement if the option expires worthless, though this caps upside potential.
• Given that implied volatilities of 33-35% are currently higher than the historical volatility of 29%, option selling strategies on EBAY may offer comparatively attractive premium collection opportunities.
• Traders should weigh the stated probabilities of expiration (67% for the put, 44% for the call) against their individual outlook for EBAY's share price movement before implementing these specific option strategies.