Interesting MIRM Put And Call Options For November 21st

Mirum Pharmaceuticals (MIRM), currently at $74.69, presents options strategies for income generation and potential entry points. Selling a $70.00 put contract offers an annualized 3.31% return if it expires worthless (70% probability), effectively securing shares at $69.60. Alternatively, an $80.00 covered call yields an 8.45% total return if exercised by November 21st, or an annualized 7.75% if it expires worthless (60% probability), with implied volatility for both options around 41%.

Analysis

For Mirum Pharmaceuticals (MIRM), currently trading at $74.69/share, two distinct options strategies are highlighted as potential tools for income generation or strategic entry. Selling a cash-secured put at the $70.00 strike offers a way to potentially acquire the stock at an effective cost basis of $69.60, a 6% discount to the current market price. Analytical models suggest a 70% probability of this out-of-the-money put expiring worthless, which would generate a 3.31% annualized return (YieldBoost) on the cash collateral. Alternatively, for existing shareholders, writing a covered call at the $80.00 strike provides a potential total return of 8.45% if the stock is called away by the November 21st expiration. The probability of this call expiring worthless is calculated at 60%, in which case the investor retains the shares and realizes a 7.75% annualized yield from the premium. Notably, the implied volatility for both options contracts is approximately 41%, which is in close alignment with the stock's actual trailing twelve-month historical volatility of 40%, suggesting that the options market is currently pricing risk in line with the stock's recent price behavior.

Key Decisions for Investors

• Investors bullish on MIRM who are seeking a lower entry point could consider selling the $70 strike put to either acquire shares at a 6% discount to the current price or generate a 3.31% annualized yield on cash.
• Current MIRM shareholders aiming to generate income could evaluate writing the $80 covered call, which offers an 8.45% potential return if exercised but caps upside participation above the $80 strike price.
• Given that implied volatility of ~41% is nearly identical to historical volatility of 40%, the options are not priced with a significant risk premium, indicating that strategies based on selling this volatility are fairly valued relative to the stock's recent price action.