Dropbox option pricing presents opportunities for long holders

March 19, 2019

Options Backtesting Results

Historical average return: +$52.20 (backtested over 1.0 years)
Historical success probability: 88.4%


Calls on Dropbox are currently trading at their most expensive levels since the cloud storage company's IPO and present an attractive opportunity for long holders of the stock. 8% out of the money short dated calls are trading for 4% of DBX's price, allowing sellers to generate significant income while retaining their position in the stock until it rises more than 8%. Backtesting results show this trade as profitable 88% of the time since the stock's IPO with a high Sharpe ratio.

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