Exploring the Put Option
Delving into Apple Inc (AAPL) options, investors saw new opportunities on November 22nd. A put contract at the $200.00 strike price is up for grabs, with a bid of $1.74. By selling this put contract, investors commit to acquiring stock at $200.00 but also receive the premium, lowering the cost basis to $198.26 per share.
Offering an 11% discount to the current stock price, the put contract is deemed out-of-the-money. Current metrics suggest an 85% probability of this put contract expiring worthless. If so, the premium equates to a 0.87% return on the cash committed, translating to 6.35% annualized.
Trade History Snapshot
Examining the trailing twelve months, a chart shows the price history, pinpointing the $200.00 strike. This visual context aids in assessing risk and reward.
Insights on the Call Option
Transitioning to the calls side, a call contract at the $230.00 strike holds a bid of $6.75. Selling this contract at a “covered call” entails committing to selling stock at $230.00. This strategy, coupled with the premium, yields a potential 5.38% return if the stock hits the price by November 22nd.
Observing the 2% premium of the $230.00 strike to the current stock price, there is a 54% chance of the contract expiring worthless, allowing the investor to retain both shares and premium. This could offer a 3.00% extra return or 21.91% annualized.
Volatility Comparison
The put contract exhibits 35% implied volatility, while the call contract shows 26%. In contrast, the actual trailing twelve-month volatility stands at 22%, considering the latest closing values and the current stock price of $224.66.
For more insights on put and call options, navigate to StockOptionsChannel.com.