3D Systems Corporation (NYSE:DDD) reported disappointing results from its fourth quarter, sending shares lower. However, 3D printing stocks as a whole have been on a hot streak lately. So what should investors who want exposure to 3D printing stocks with less risk do? Stock Options Channel highlights (via NASDAQ) a couple of new options trades which are now available.
The new options which started trading today are April 25 contracts.
3D Systems on a put contract
The site suggests that the put contract for 3D Systems Corporation (NYSE:DDD) with a $68 strike price might be a possibility for some investors. Its current bid is $4, and investors who sell to open that put contract will commit to buying it at $68 and collect the premium, which puts the cost basis, before commissions, at $64. Investors who have already been thinking of getting into 3D Systems may be particularly interested in this contract.
The $68 strike is a 2% discount to the current trading price, and the put contract could expire worthless. According to Stock Options Channel, the current odds of this happening are at 57%. If the contract does expire worthless, then the premium would be a 5.88% return on the cash commitment, or a 42.98% annualized return.
3D Systems on a call contract
On the call side, they recommend the call with the $69.50 strike price for 3D Systems Corporation (NYSE:DDD), which has a bid of $4.75. Investors who buy shares at the current level and then sell to open that call contract as a covered call will sell the stock at $69.50. Since the call seller also collects the premium, the total return would be 7.5% if the stock is called away at the April 25 expiration.
The $69.50 represents a 1% premium to the current trading price and could also expire worthless, at which point the investor keeps the shares and collects the premium. Stock Channel Options Channel estimates that there are 47% odds of that happening. If the covered call expires worthless, the premium is a 6.88% extra return or 50.24% annualized.