Interesting NCLH Put And Call Options For August 15th

Selling the $18.00 strike put option on Norwegian Cruise Line Holdings Ltd (NCLH) offers a potential 7.22% return on cash commitment if it expires worthless, with current analytics suggesting a 58% probability of that outcome. Conversely, selling the $20.00 strike covered call option provides a potential 13.72% return if the stock is called away, but carries a 59% chance of expiring worthless, resulting in a 4.43% yield boost; implied volatilities for the put and call options are 61% and 64%, respectively, compared to a trailing twelve-month volatility of 52%.

Analysis

The article details two options strategies for Norwegian Cruise Line Holdings Ltd (NCLH), which is currently trading at $18.30 per share. One strategy involves selling an out-of-the-money put contract at the $18.00 strike, which provides a $1.30 premium and results in an effective share acquisition cost of $16.70 if assigned; current analytics indicate a 58% probability of this put expiring worthless, potentially yielding a 7.22% return on cash (45.45% annualized YieldBoost). The second strategy is selling a covered call at the $20.00 strike for existing NCLH shareholders, yielding an $0.81 premium; this could lead to a total return of 13.72% if the stock is called away by the August 15th expiration, or a 4.43% YieldBoost (27.85% annualized) if it expires worthless, an outcome with a 59% probability. Significantly, the implied volatilities for these put (61%) and call (64%) options are elevated compared to NCLH's actual trailing twelve-month historical volatility of 52%, suggesting option premiums are currently rich, which is generally favorable for option sellers.

Key Decisions for Investors

• Investors considering purchasing NCLH could explore selling the $18.00 strike put to potentially acquire shares at an effective cost of $16.70 or earn a 7.22% return should the option expire unexercised.
• Current NCLH shareholders aiming to generate income could assess selling the $20.00 strike covered call, targeting a 13.72% return if called by the August 15th expiration or a 4.43% income boost if the option expires worthless, understanding this strategy caps upside potential.
• Given that implied volatilities for NCLH options (61-64%) are notably above the stock's 52% trailing historical volatility, option selling strategies may present enhanced premium capture opportunities, but require careful consideration of NCLH's fundamentals and individual risk appetite before implementation.