Roblox Corp (symbol: RBLX) investors today saw the start of trading in new options for expiration January 2023. At Stock Options Channel, our YieldBoost formula scanned the RBLX options chain for the new January 2023 contracts and generated a put- and identified a call contract of particular interest.
The put contract at a strike price of $31.00 has a current bid of $2.66. If an investor were to sell to open this put contract, they commit to buying the stock at $31.00 but also collect the premium, making the cost basis of the shares $28.34 (before brokerage commissions). For an investor already interested in buying RBLX shares, this could present an attractive alternative to today’s payment of $32.01/share.
Since the $31.00 strike price represents a discount of approximately 3% to the stock’s current trading price (in other words, it is out of the money by that percentage), there is also a chance that the put contract will expire worthless. The current analytical data (including Greeks and implied Greeks) suggests that the probability of this happening is currently 99%. Stock Options Channel will track these odds over time to see how they change and will post a chart of these numbers on our website under the contract detail page for that contract. Should the contract expire worthless, the premium would represent a return of 8.58% on the cash obligation, or 71.18% on an annual basis – at Stock Options Channel we call that the YieldBoost.
Below is a chart showing the past twelve month trading history for Roblox Corp, highlighting in green where the $31.00 strike sits relative to that history:
On the call side of the options chain, the call contract at a strike price of $33.00 has a current bid of $2.83. If an investor were to buy shares of RBLX stock at the current price level of $32.01/share and then sell this call contract as a “covered call”, they commit to selling the stock at $33.00. Considering that the call seller will also collect the premium, this would result in a total return (excluding dividends, if any) of 11.93% if the stock is called at expiration in January 2023 (before brokerage commissions). Of course, there could potentially still be a lot of upside on the table if RBLX stock really does go higher, which is why it’s important to look back at Roblox Corp’s 12-month trading history and study fundamentals of the business. Below is a chart showing RBLX’s past 12-month trading history, with the $33.00 strike highlighted in red:
Given that the $33.00 strike price represents an approximately 3% premium to the stock’s current trading price (in other words, it’s out of the money by that percentage), there’s also a possibility that the covered call contract would expire worthless, in which case the investor would retain both their equity interest and the premium received. The current analytical data (including Greeks and implied Greeks) suggests that the probability of this happening is currently 99%. On our website, under the contract detail page for that contract, the Stock Options Channel tracks these quotes over time to see how they are changing and publishes a chart of these numbers (options contract trading history is also graphed). Should the covered call contract expire worthless, the premium would represent an additional 8.84% return increase for the investor, or 73.34% on an annualized basis, which we refer to as the YieldBoost.
In the meantime, we calculate the actual volatility over the last 12 months (taking into account the closing values for the last 252 trading days and today’s price of $32.01) to be 97%. For more put and call option contract ideas worth checking out, visit StockOptionsChannel.com.
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