First week of August 20, trading in Alexandria Real Estate Stock Options (ARE)

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IInvestors at Alexandria Real Estate Equities Inc (Symbol: ARE) saw new options trading begin this week with an expiration date of 20 August. IN Stock options channel, our YieldBoost formula searched the ARE option chain for the new August 20 contracts and identified one put and one call of particular interest.

The current offer for the $ 175 strike put is $ 1.85. If the investor was to sell this put contract with the opening of the deal, he agrees to buy the shares at $ 175.00, but will also receive a premium, resulting in a base price of $ 173.15 (excluding brokers’ commission). For an investor already interested in buying ARE shares, this could be an attractive alternative to today’s payment of $ 183.90 per share.

Since the $ 175.00 strike represents a roughly 5% discount to the stock’s current trading price (in other words, by this percentage it is not in the money), there is also the possibility that the put contract will expire useless. Current analytics (including Greeks and implied Greeks) show that there is currently a 74% chance of this happening. The Stock Options Channel will track these odds over time to see how they change by posting a chart of these numbers on our website under the contract details page for this contract… If the contract expires useless, the premium will represent 1.06% of the return on cash liabilities, or 7.42% year over year – in the stock options channel, we call this YieldBoost.

Below is a chart showing the concluding twelve month trading history of Alexandria Real Estate Equities Inc, highlighted in green, where the $ 175.00 strike against that story is located:

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Looking at the call side of the options chain, the current rate for a $ 185 strike call is $ 4.20. If an investor was to buy ARE shares at the current price level of $ 183.90 per share and then enter into a sell contract prior to opening as a covered call, he agrees to sell the shares at $ 185.00. Considering that the seller of the call will also receive a premium that will provide a total return (excluding dividends, if any) of 2.88% if the shares are withdrawn after August 20 (before brokers’ commissions). Of course, if ARE shares do rise, there is potentially a lot of upside potential left, so it becomes important to study the last twelve month trading history of Alexandria Real Estate Equities Inc, as well as the basics of the business. Below is a chart showing ARE’s twelve month trading history, with the $ 185.00 strike highlighted in red:

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Given the fact that the $ 185.00 strike represents a premium of approximately 1% to the current trading price of the stock (in other words, that percentage is not in the money), there is also the possibility that the covered call contract will expire uselessly. in this case, the investor will retain both his shares and the collected premium. Current analytic data (including Greeks and implied Greeks) show that there is currently a 53% chance of this happening. On our website in the section the contract details page for this contractThe Stock Options Channel will track these odds over time to see how they change and publish a graph of these numbers (the trading history of the option contract will also be displayed). If the covered call expires, the premium will be 2.28% additional return to the investor, or 16.03% year over year, which we call YieldBoost.

The implied volatility in the example put is 27%, while the implied volatility in the example call is 22%.

In the meantime, we calculate the actual moving volatility for twelve months (taking into account the closing values ​​of the last 252 trading days, as well as today’s price of $ 183.90), equal to 21%. To learn more about put and call options contracts, visit StockOptionsChannel.com.

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

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