MGM Options Contracts Present Potential Investor Opportunities

MGM Resorts International (MGM) sees new options that may attract investors. With potential discounts and returns from put and call contracts, this presents interesting trading opportunities in the current market landscape.

Date: 14-01-2025

AI Rating: 7

Options Contracts Overview
Investors have new opportunities with MGM Resorts International (MGM) as new options contracts have been introduced, expiring on April 17th. The put options at a $32.00 strike create a prospect of achieving a favorable cost basis compared to the current share price of $32.38. A premium of $0.19 offers an attractive alternative for purchasing shares.

The put contract's strike price represents about a 1% discount to the stock’s current trading price, with a probability of the contract expiring worthless at 58%. If this occurs, investors could see a return of 0.59% on their cash commitment, equating to approximately 2.33% annualized, termed as the YieldBoost.

Call Options Analysis
On the other hand, the call contract at a $33.00 strike price, with a bid of $0.56, indicates the potential for investors opting for a 'covered call' strategy. This strategy allows for a total return of 3.64% if the stock is sold at the expiration date, with a possibility that the contract could also expire worthless, maintaining both shares of stock and premium collected. The likelihood of it expiring worthless stands at 48%, providing a YieldBoost of approximately 1.73% or 6.79% annualized.

Volatility Insight
The implied volatility of the put option is 39%, while the call option shows a slightly higher implied volatility of 41%. The actual trailing twelve-month volatility is calculated at 34%, giving investors a broader view of risk associated with trading these contracts.

Stocks: MGM