First week of Kik 16 September for options trading

IInvestors in Cheesecake Factory Inc. (Symbol: CAKE) New options begin trading this week, through September 16th. In the stock options channel, YieldBoost formula looked up and down the CAKE options chain of new contracts on September 16 and identified one call contract and one call contract of particular interest.

The short contract at the strike price of $25.00 has a current bid of $1.40. If the investor were to sell to open this sell contract, he would commit to buying the stock at $25.00, but would also collect the premium, setting the cost basis for the shares at $23.60 (before broker commissions). For an investor already interested in buying CAKE shares, this can be an attractive alternative to paying $27.49/share today.

Since the $25.00 strike represents an approximate 9% discount to the stock’s current trading price (in other words, it’s out of the money by that percentage), there’s also the possibility that the sell contract will expire worthless. Current analytical data (including the Greek and the implied Greek) indicate that the current odds of this happening are 71%. The Stock Options Channel will track those odds over time to see how they change, and publish a chart of these numbers on our website under the Contract Details page for this contract. If the contract expires worthless, the premium would represent a return of 5.60% on the cash obligation, or 32.44% annually – in Stock Options Channel we call this YieldBoost.

Below is a chart showing the trading history for the next twelve months for Cheesecake Factory Inc. , and highlights in green the position of the $25.00 strike relative to that date:

Moving to the ask side of the options chain, a call contract at the strike price of $30.00 has a current bid of $1.25. If an investor buys shares of CAKE stock at the current price level of $27.49/share, and then sells that buy contract to open it as a “covered call,” he commits to sell the stock at $30.00. Given that the call seller would also collect the premium, which would generate a total return (excluding dividends, if any) of 13.68% if the stock was called at expiration on September 16th (before broker commissions). Of course, a lot of upside could be left on the table if CAKE shares really rose, which is why looking at Cheesecake Factory Inc’s twelve-month trading history. , In addition to studying the basics of the business becomes important. Below is a chart showing the twelve month trading history of CAKE, with the $30.00 strike highlighted in red:

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Given the fact that the $30.00 strike represents an approximate premium of 9% over the stock’s current trading price (in other words, it’s out of the money by that percentage), there’s also the possibility that the covered call will expire worthless, in which case the investor holds both his shares of the shares and the bonus collected. Current analytical data (including the Greek and the implied Greek) indicate that the current odds of this happening are 63%. On our website under the Contract Details page for this contract, the Stock Options Channel will track those odds over time to see how they change and publish a chart of these numbers (the option contract trading history will also be plotted). Should the covered call contract expire worthless, the premium would represent an increase of 4.55% of the investor’s additional return, or 26.34% per annum, which we refer to as YieldBoost.

The implied volatility in the sell contract example is 62%, while the implied volatility in the buy contract example is 53%.

Meanwhile, we calculate the actual twelve-month volatility (taking into account the closing values ​​of the last 252 trading days plus today’s price of $27.49) to be 51%. For more call and put options contract ideas worth looking at, visit StockOptionsChannel.com.

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The opinions and opinions expressed here are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.

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