July 25th Options Now Available For Alphabet (GOOGL)

The article from Stock Options Channel discusses potential strategies for investors using GOOGL options. Selling a $160 put offers a 1.97% return if it expires worthless, with a 70% probability based on current analytics, while a covered call strategy at $175 yields 6.25% if the stock is called away, or a 3.01% boost if it expires worthless, with a 58% probability; implied volatility for the put and call are 35% and 32% respectively, compared to a 32% trailing twelve month volatility.

Analysis

The article details two options strategies for Alphabet Inc. (GOOGL), trading at $169.51 per share. Selling a $160.00 strike put contract, with a current bid of $3.15, offers an investor the potential to acquire GOOGL shares at an effective cost basis of $156.85 if assigned, representing an approximate 6% discount to the current price. Analytical data suggests a 70% probability of this out-of-the-money put expiring worthless, which would yield a 1.97% return on the cash commitment (14.37% annualized), termed "YieldBoost." The implied volatility for this put is 35%. Alternatively, for existing GOOGL shareholders, selling a covered call at the $175.00 strike price, with a bid of $5.10, commits the investor to sell shares at $175.00. This strategy could generate a total return of 6.25% if the stock is called away by the July 25th expiration, before commissions. There is a 58% calculated probability of this call expiring worthless, in which case the investor retains the shares and the premium, achieving a 3.01% "YieldBoost" (21.96% annualized). The implied volatility for this call is 32%, aligning with GOOGL's actual trailing twelve-month volatility of 32%. The analysis presented by Stock Options Channel highlights these strategies as potentially attractive alternatives for investors interested in GOOGL, depending on their objectives for share acquisition or income generation.

Key Decisions for Investors

• Investors considering purchasing GOOGL shares and aiming for a lower entry point than the current $169.51 could evaluate selling the $160 strike put, which offers a $3.15 premium and an effective cost basis of $156.85 if assigned, while noting the 70% probability of it expiring worthless for a 1.97% yield.
• Existing GOOGL shareholders seeking to generate income and comfortable with a potential sale at $175.00 could consider writing the $175 strike covered call, collecting a $5.10 premium, which could result in a 6.25% total return if called away by July 25th or a 3.01% yield boost if it expires worthless (58% probability).
• Investors should note that the put option's implied volatility of 35% is slightly higher than the call option's implied volatility (32%) and the stock's actual trailing twelve-month volatility (32%), which may indicate a relatively richer premium for sellers of the put option, contingent on their willingness to acquire the stock at the strike price.
• When considering these options strategies, investors should factor in their individual risk tolerance, outlook for GOOGL, and the potential impact of broker commissions on the stated returns.