Investors in MaxLinear Inc (Symbol: MXL) have new options available this week, specifically for the November 21st expiration. At Stock Options Channel, our YieldBoost formula has analyzed the MXL options chain and identified one put and one call contract of particular interest.
The put contract at the $16.00 strike price currently has a bid of $1.70. If an investor sells-to-open this put contract, they commit to purchasing the stock at $16.00 while collecting the premium, effectively lowering their cost basis to $14.30 (before broker commissions). For those already interested in acquiring shares of MXL, this could be an attractive alternative to paying the current market price of $16.12 per share.
Since the $16.00 strike represents approximately a 1% discount to the current trading price (making it out-of-the-money by that percentage), there is a possibility that the put contract could expire worthless. Current analytical data, including greeks and implied greeks, suggest a 57% chance of this occurring. Stock Options Channel will monitor these odds over time, publishing a chart on our website under the contract detail page for this contract. Should the contract expire worthless, the premium would yield a 10.62% return on the cash commitment, or an impressive 75.98% annualized — a figure we refer to as the YieldBoost.
Below is a chart illustrating the trailing twelve-month trading history for MaxLinear Inc, highlighting in green where the $16.00 strike is positioned relative to that history:
On the calls side of the options chain, the call contract at the $17.00 strike price has a current bid of $1.40. If an investor purchases shares of MXL stock at the current price of $16.12 and sells-to-open this call contract as a “covered call,” they commit to selling the stock at $17.00. Including the premium collected, this would yield a total return (excluding dividends) of 14.14% if the stock is called away at the November 21st expiration (before broker commissions). However, significant upside could be left on the table if MXL shares appreciate substantially, making it essential to analyze the trailing twelve-month trading history and the company’s fundamentals. Below is a chart showing MXL’s trading history, with the $17.00 strike highlighted in red:
The $17.00 strike represents approximately a 5% premium to the current trading price (making it out-of-the-money by that percentage), which means there is a chance the covered call contract could expire worthless. In this case, the investor would retain both their shares and the premium collected. Current analytical data suggest a 52% probability of this happening. Stock Options Channel will track these odds over time, publishing a chart of those numbers on our website under the contract detail page for this contract. If the covered call contract expires worthless, the premium would represent an 8.68% boost to the investor’s return, or 62.11% annualized, which we also refer to as the YieldBoost.
The implied volatility for the put contract is 81%, while the call contract has an implied volatility of 78%. Meanwhile, we calculate the actual trailing twelve-month volatility (considering the last 250 trading days and today’s price of $16.12) to be 75%. For more put and call options contract ideas worth exploring, visit StockOptionsChannel.com.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
