HomeAway, Inc (NASDAQ:AWAY) well on its options way
HomeAway, Inc (NASDAQ:AWAY) investors saw some new options available for a 2014 April expiration. One of the main data-points that goes into any price that an option-buyer is willing to pay, is its time-value. Thus, with 241-days until expiry the new contracts represent a potential –opportunity for puts and calls sellers to achieve a premium that is higher. This premium would be available for these contracts with a much closer expiration. Of these 2014 April contracts, one call and one put option is of particular interest.
The put contract
The put-contract at the $25.00 strike-price has a current-bid of $2.00. If an investor were to sell to open that put-contract, they would be committing to buy the company stock at $25.00. In addition, they will collect the premium, setting the cost-basis of the shares at $23(excluding broker commission). To any investor who is already interested in buying AWAY shares, this could represent an attractive-alternative to having to pay $2.69 per share, today.
Since the $25.00 strike represents approximately a 13% discount to the present trading-price of AWAY stock, there is a distinct possibility that the put-contract may also expire worthless. The current analytical-data suggests that the odds of that happening currently are 72%. In the event that the contract expires worthless, the premium will represent 8.00% return on the cash-commitment, or 12.12 percent on an annualized basis.
The call contract
As far as the calls side of the option-chain is concerned, the call-contract at the $30.00 strike-price currently has a bid of $43.00. If an investor buys the shares at the present price-level of $28.69 per share, and sell to open that particular call contract as a covered-call, they will be committing to sell the AWAY stock at $30.00.
HomeAway, Inc (NASDAQ:AWAY) is an online marketplace for the vacation-rental industry. As of 31 December 2012, it operated its online marketplace via 44 different websites in 13 different languages.