Open Text Corp Options Present Potential Investment Opportunities

A recent report highlights new options for Open Text Corp, suggesting attractive investment strategies for options traders. The offered contracts may influence stock price as investors evaluate the potential of premium collection against current trading levels.

Date: 25-09-2024

AI Rating: 7

The report reveals new option contracts for Open Text Corp (OTEX), detailing put and call opportunities that may impact investor interest and stock pricing. Analyzing these new developments provides insights into the company's stock potential.

Put Option Analysis: The report discusses a put contract at a strike price of $27.50 with a current bid of 40 cents. If an investor sells this put contract, they commit to buy the stock at $27.50, effectively making their cost basis $27.10 (excluding broker commissions). This represents an 18% discount to the current trading price of $33.56. Furthermore, the odds of the put contract expiring worthless are estimated at 81%. Should the option expire worthless, the investor would benefit from a 1.45% return on cash commitment, or 2.28% annualized, known as the YieldBoost.

Call Option Analysis: On the calls side, a contract is available at a strike price of $42.50, with a bid of 55 cents. An investor purchasing shares at $33.56 and writing this call would potentially see a total return of 28.28% (excluding dividends) if the call is exercised at expiration. The odds of this call expiring worthless are suggested to be 76%, underlining the potential for additional income while retaining shares. In such a case, the premium would provide a 1.64% extra return, or 2.57% annualized YieldBoost.

Implied Volatility: The report also mentions that the implied volatility for the put option is 37%, while for the call option, it's 33%. The actual trailing twelve-month volatility is reported at 29%, providing further context for investors assessing risk.

These attractive options highlight that investors may be more inclined to view Open Text Corp's shares positively, given the potential for premium collection, the strike prices relative to current valuations, and the overall implied volatility which can affect option pricing.

Stocks: OTEX