NVO Bear Call Spread at $1.37 Seems to be Above Fair Value


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This NVO Credit Call Spread Could Turn 38% Profit in 8 Days

Bearish play with a target stock price of $114 or below

Strategy has +38% upside potential and 78% overvalued


Expiration13-Dec-24
Buy119 Call
Sell114 Call
Credit:$1.37


Novo Nordisk A/S stock price has gained +1.6% today to $110.39. The above option strategy is a bearish play that shows a theoretical 76% win rate, based on NVO's historical stock price behavior.

Option Profit Calculator for NVO Call Spread at 13-Dec-24 Expiration

If NVO stock price at expiration is at or below $114.00, this spread has a 38% upside potential

The optimal stock price for this option strategy is to close at or below $114.00 on the expiration date, December 13, 2024. In that scenario, both calls would expire worthless, allowing you to keep the entire $1.37 you received when selling the spread. That corresponds to a potential +38% return on the amount at risk with 8 days left until expiration.

The maximum gain will be realized if the stock price is at or below 114.00. The maximum gain is $1.37

The breakeven point is at 115.37, which is 4.4% above the current spot price.

The maximum loss will occur when the stock price is at or above 119. The max loss is $3.63.

NVO Spread Current Market Price vs. Historical Average

NVO Call Spread is trading at a 78% premium to historical average.

Using historical data to measure how a similar spread in NVO was priced in the market, the 4-year average value was 0.77, with a high mark of 1.40 and a low of 0.23.

Currently, this vertical call spread is bid at 1.37 and offered at 1.77. The midpoint of the spread is 1.57.

If we use 0.77 as our historical fair value benchmark, the current market bid price is at a 78% premium, while the current market midpoint represents a 104% premium.

Current PriceHistorical Values of Similar Spreads
BidAskMidpointAverageHighLow
1.371.771.570.771.400.23
Market Chameleon captures daily records of market data to calculate historical benchmarks and generate estimated values.

Takeaway

The NVO call spread we've identified here can be a good way to play a bearish outlook because the option strategy has a +38% upside potential, is 78% overpriced relative to historical measures, and will benefit from a stock price at or below $114.

See how Market Chameleon can help you make smarter and more efficient trades!



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NOTE: Stock and option trading involves risk that may not be suitable for all investors. Examples contained within this report are simulated And may have limitations. Average returns and occurrences are calculated from snapshots of market mid-point prices And were Not actually executed, so they do not reflect actual trades, fees, or execution costs. This report is for informational purposes only, and is not intended to be a recommendation to buy or sell any security. Neither Market Chameleon nor any other party makes warranties regarding results from its usage. Past performance does not guarantee future results. Please consult a financial advisor before executing any trades. You can read more about option risks and characteristics at theocc.com.


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