July 25th Options Now Available For Viking Therapeutics (VKTX)

Analysis of Viking Therapeutics (VKTX) options reveals potential strategies for investors, including selling put options at the $26.50 strike to potentially acquire shares at a lower cost basis, with a 56% chance of the contract expiring worthless and yielding a 5.02% return. Alternatively, selling covered call options at the $27.00 strike could generate a 5.44% return if the stock is called away, with a 46% chance of the contract expiring worthless and providing a 4.09% yield boost; implied volatilities for the put and call options are 86% and 84%, respectively, compared to a trailing twelve-month volatility of 81%.

Analysis

The article details two options-based strategies for Viking Therapeutics (VKTX), which is currently trading at $26.64 per share. For investors considering acquiring shares, selling the $26.50 strike put contract, with a bid of $1.33, offers a potential entry at an effective cost basis of $25.17. There is an analytically derived 56% probability of this put expiring worthless, which would result in the seller retaining the premium for a 5.02% return on the cash commitment, or 36.64% annualized. Alternatively, for existing shareholders, selling a covered call at the $27.00 strike price, bid at $1.09, could generate a total return of 5.44% if the stock is called away by the July 25th expiration. If this call option expires worthless, an event with an assessed 46% probability, the investor would keep the shares and the premium, enhancing their return by 4.09% (29.87% annualized). Notably, the implied volatility for the put (86%) and call (84%) options slightly exceeds VKTX's trailing twelve-month actual volatility of 81%, suggesting that current option premiums reflect a somewhat heightened expectation of price movement, a condition that typically benefits option sellers.

Key Decisions for Investors

• Investors interested in acquiring VKTX shares at a potential discount could consider selling the $26.50 strike put, aiming for an effective purchase price of $25.17 or a 5.02% yield if the option expires worthless., Current VKTX shareholders looking to generate income might evaluate selling the $27.00 strike covered call, which offers a 5.44% potential return if called by the July 25th expiration or a 4.09% yield boost if it expires out-of-the-money, though this strategy caps upside potential above $27.00., Given that implied volatilities for these options (84-86%) modestly exceed the stock's trailing actual volatility (81%), option sellers may find current premium levels relatively attractive, but should also be mindful of the risks associated with each strategy.