Investors in Microsoft Corporation (Symbol: MSFT) saw new options begin trading this week, for the October 21st expiration. One of the key data points that goes into the price an option buyer is willing to pay, is the time value, so with 245 days until expiration the newly trading contracts represent a possible opportunity for sellers of puts or calls to achieve a higher premium than would be available for the contracts with a closer expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the MSFT options chain for the new October 21st contracts and identified one put and one call contract of particular interest.
The put contract at the $280.00 strike price has a current bid of $22.40. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $280.00, but will also collect the premium, putting the cost basis of the shares at $257.60 (before broker commissions). To an investor already interested in purchasing shares of MSFT, that could represent an attractive alternative to paying 289.44/share today.
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