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First Week of November 18th Choices Buying and selling For Tencent Music Leisure Group (TME)

Buyers in Tencent Music Leisure Group (Image: TME) noticed new choices develop into obtainable this week, for the November 18th expiration. At Inventory Choices Channel, our YieldBoost components has appeared up and down the TME choices chain for the brand new November 18th contracts and recognized one put and one name contract of specific curiosity.

The put contract on the $3.50 strike value has a present bid of 21 cents. If an investor was to sell-to-open that put contract, they’re committing to buy the inventory at $3.50, however may even gather the premium, placing the associated fee foundation of the shares at $3.29 (earlier than dealer commissions). To an investor already serious about buying shares of TME, that would characterize a horny different to paying $3.60/share as we speak.

As a result of the $3.50 strike represents an approximate 3% low cost to the present buying and selling value of the inventory (in different phrases it’s out-of-the-money by that proportion), there may be additionally the chance that the put contract would expire nugatory. The present analytical knowledge (together with Greeks and implied Greeks) recommend the present odds of that taking place are 60%. Inventory Choices Channel will observe these odds over time to see how they modify, publishing a chart of these numbers on our web site underneath the contract element web page for this contract. Ought to the contract expire nugatory, the premium would characterize a 6.00% return on the money dedication, or 91.09% annualized — at Inventory Choices Channel we name this the YieldBoost.

Beneath is a chart displaying the trailing twelve month buying and selling historical past for Tencent Music Leisure Group, and highlighting in inexperienced the place the $3.50 strike is positioned relative to that historical past:


Turning to the calls facet of the choice chain, the decision contract on the $4.00 strike value has a present bid of 14 cents. If an investor was to buy shares of TME inventory on the present value degree of $3.60/share, after which sell-to-open that decision contract as a “coated name,” they’re committing to promote the inventory at $4.00. Contemplating the decision vendor may even gather the premium, that may drive a complete return (excluding dividends, if any) of 15.00% if the inventory will get referred to as away on the November 18th expiration (earlier than dealer commissions). In fact, plenty of upside may doubtlessly be left on the desk if TME shares actually soar, which is why trying on the trailing twelve month buying and selling historical past for Tencent Music Leisure Group, in addition to learning the enterprise fundamentals turns into necessary. Beneath is a chart displaying TME’s trailing twelve month buying and selling historical past, with the $4.00 strike highlighted in purple:

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Contemplating the truth that the $4.00 strike represents an approximate 11% premium to the present buying and selling value of the inventory (in different phrases it’s out-of-the-money by that proportion), there may be additionally the chance that the coated name contract would expire nugatory, wherein case the investor would maintain each their shares of inventory and the premium collected. The present analytical knowledge (together with Greeks and implied Greeks) recommend the present odds of that taking place are 66%. On our web site underneath the contract element web page for this contract, Inventory Choices Channel will observe these odds over time to see how they modify and publish a chart of these numbers (the buying and selling historical past of the choice contract may even be charted). Ought to the coated name contract expire nugatory, the premium would characterize a 3.89% enhance of additional return to the investor, or 59.04% annualized, which we confer with because the YieldBoost.

The implied volatility within the put contract instance is 81%, whereas the implied volatility within the name contract instance is 82%.

In the meantime, we calculate the present trailing twelve month volatility (contemplating the final 252 buying and selling day closing values ​​in addition to as we speak’s value of $3.60) to be 76%. For extra put and name choices contract concepts price taking a look at, go to StockOptionsChannel.com.

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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.

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