Investors at Live Nation Entertainment Inc (Symbol: LYV) have seen new options become available this week for a January 2025 expiration date. One of the key inputs that goes into the price an option buyer is willing to pay is time value. As such, a new contract with 848 days to maturity represents a potential opportunity for a put or call seller to achieve a higher than normal premium. Make it available for contracts with a closer expiry date. On the Stock Options Channel, the YieldBoost formula examined his LYV option chain for his January 2025 new contract and identified his 1 put and his 1 call contracts of particular interest.
The current bid for the put contract with a strike price of $75.00 is $14.60. If the investor sells the put contract, he promises to buy the stock for $75.00, but also recovers the premium, making the stock’s cost basis he $60.40 (before broker fees). For an investor already interested in buying LYV shares, this could be a more attractive alternative than he is currently paying $78.52 per share.
A strike of $75.00 represents a discount of about 4% to the current stock’s trading price (that is, out of the money by that percentage), so it is possible that the put contract will expire worthless. Current analytical data (including Greek and implied Greek) suggest that the chance of it happening is currently 69%. The Stock Options Channel tracks these odds over time to see how they change and publishes charts of these numbers on its website under the contract details page for this contract. increase.If the contract expires at no value, the premium represents a return of 19.47% on the cash commitment, or an annualized rate of 8.38% — in the stock option channel, this yield boost.
Below is a chart showing Live Nation Entertainment Inc’s trading history over the past 12 months, highlighted in green where the $75.00 strike is against that history.
Looking at the call side of the options chain, the current bid for the call contract with a strike price of $82.50 is $21.20. If an investor buys his LYV shares at his $78.52/share, which is the current price level, and opens the call contract as a “covered call,” they sell the shares at his $82.50. I promise to Considering that the seller of the call also recovers the premium, if the stock were called at his January 2025 maturity (before brokerage fees), that would be a total return of 32.07% (excluding dividends, if any). increase. Of course, if LYV’s stock price surges, it could leave a lot of upside. That’s why it’s important to look at his 12-month trading history for Live Nation Entertainment Inc and study the business fundamentals. Below is a chart showing LYV’s trading history over the last 12 months, with the $82.50 strike highlighted in red.
Considering the fact that the $82.50 strike represents about a 5% premium to the current stock trading price (i.e. it is out of the money by that percentage), if the covered call contract is then , the investor will leave his stock and premium collected. Current analytical data (including Greek and implied Greek) suggest that there is currently a 33% chance of it happening. On our website under the contract details page for this contract, the Stock Options Channel tracks these odds over time to see how the odds change and chart those numbers. Publish (the trading history of the options contract is also charted). If the covered call contract expires at no value, the premium equates to his 27.00% increase in additional return to investors, or his 11.62% annualized rate. yield boost.
The implied volatility in the put contract example is 53%, while the implied volatility in the call contract example is 48%.
On the other hand, we calculate the actual 12-month volatility (taking into account the closing prices of the last 252 trading days and today’s price of $78.52) at 47%. Visit StockOptionsChannel.com for more interesting put and call option contract ideas.
The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.
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