Quick Summary
- New options for Millicom International Cellular SA (TIGO) with December 19th expiration are available.
- A $40.00 strike put option offers a premium, potentially reducing the cost basis of shares.
- A $50.00 strike call option can provide a return if shares are sold at that price, acting as a covered call strategy.
- Implied volatility for the put is 60%, and for the call is 46%, compared to the stock’s actual trailing twelve-month volatility of 31%.
Exploring TIGO Options: Puts and Calls
Investors considering Millicom International Cellular SA (TIGO) have seen new options become available for the December 19th expiration. Analysis by Stock Options Channel identifies specific put and call contracts of potential interest.
The $40.00 Strike Put Option
One notable option is a put contract with a $40.00 strike price, currently bidding at 30 cents. For an investor selling this put to open, they commit to buying TIGO shares at $40.00. However, they also collect the 30-cent premium, effectively lowering their cost basis for the shares to $39.70 before commissions. This strategy could be a more attractive alternative for those already looking to acquire TIGO shares at a price below the current market value of $46.80.
💡 Given that the $40.00 strike is approximately 15% below the current trading price (out-of-the-money), there’s a significant chance this put contract could expire worthless. Current analytical data suggests a 77% probability of this occurring. Stock Options Channel will monitor these odds, providing updates on their website.
📊 If the contract expires worthless, the collected premium would represent a 0.75% return on the cash commitment. This translates to an annualized return of 4.56%, a strategy referred to as YieldBoost.
The $50.00 Strike Call Option
On the call side, a contract with a $50.00 strike price is currently bidding at $1.90. An investor purchasing TIGO shares at $46.80 and simultaneously selling this call (a covered call strategy) commits to selling their shares at $50.00. After accounting for the $1.90 premium, this strategy could yield a total return of 10.90% if the shares are called away at expiration, excluding any dividends.
⚡ However, significant upside potential could be missed if TIGO shares experience a substantial price increase. Therefore, analyzing TIGO’s trailing twelve-month trading history and fundamental business performance is crucial.
📍 The $50.00 strike represents approximately a 7% premium to the current stock price (out-of-the-money). There is a 60% probability that this covered call contract could expire worthless. In such a scenario, the investor retains ownership of their TIGO shares and the collected premium.
📊 If the covered call expires worthless, the premium adds an extra 4.06% return to the investor, equating to an annualized return of 24.68% – also known as YieldBoost.
Volatility Comparison
The implied volatility for the analyzed put contract stands at 60%, while the implied volatility for the call contract is 46%.
📍 In contrast, the actual trailing twelve-month volatility for Millicom International Cellular SA, calculated using the last 249 trading day closing values and the current price of $46.80, is 31%.
📌 For additional insights and potential option contract ideas, resources like StockOptionsChannel.com can be explored.
Concluding Thoughts
The introduction of new December 19th options for TIGO presents distinct strategies for investors. Selling a $40.00 put could lower the entry cost for share acquisition, while writing a $50.00 covered call offers potential premium income with a defined exit price.
Both strategies carry probabilities of expiring worthless, generating returns solely from the collected premiums, known as YieldBoost. Investors should weigh these potential outcomes against TIGO’s historical price action and fundamental outlook.