Investors in Navient Corp (ticker: NAVI) saw new options start trading today, for December 2024 expiry. One of the key data points that goes into the price that a buyer of option is ready to pay is time value, so with 819 days to expiration, new trade contracts represent a possible opportunity for put or call sellers to obtain a higher premium than would be available for contracts whose expiration is nearer. At Stock Options Channel, our YieldBoost formula scoured the NAVI options channel for new December 2024 contracts and identified the next put contract of particular interest.
The put contract at the strike price of $12.50 has a current bid of 50 cents. If an investor were to sell to open this put contract, they are committing to buy the stock at $12.50, but will also receive the premium, which will put the base price of the stock at $12.00 (before brokerage fees). For an investor already interested in buying shares of NAVI, this could represent an attractive alternative to paying $13.39/share today.
Since the strike price of $12.50 represents a discount of approximately 7% from the current stock price (in other words, it is out of play by that percentage), it is also possible that the contract of sale expires worthless. Current analytical data (including Greeks and implied Greeks) suggests that the current chance of this happening is 99%. Stock Options Channel will track these odds over time to see how they change, by posting a table of these numbers on our website under the contract detail page for that contract. If the contract expires worthless, the premium would represent a return of 4.00% on the cash commitment, or 1.78% annualized – at Stock Options Channel, we call this the Yield increase.
Below is a chart showing Navient Corp’s last 12-month trading history, and highlighting in green where the $12.50 strike falls in relation to that history:
Meanwhile, we calculate that the actual volatility for the last twelve months (considering the closing values for the last 252 trading days as well as the current price of $13.39) is 45%. For more put and call options contract ideas worth considering, visit StockOptionsChannel.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.