April 2025 Contracts Offer Attractive Strategies for Investors
Today, traders for iShares Trust – iShares MSCI EAFE ETF (Symbol: EFA) welcomed new options for the April 2025 expiration. These contracts, with 142 days before they expire, could present an opportunity for those looking to sell puts or calls, as the time value factor allows for potentially higher premiums than contracts with nearer expiration dates. Stock Options Channel’s YieldBoost formula has identified one put and one call contract to consider.
Put Option Analysis: A Bargain for Potential Buyers
The put contract at the $69.00 strike price currently has a bid of 25 cents. Selling this put means an investor agrees to buy the stock at $69.00, while also collecting the premium, effectively lowering their cost basis to $68.75 (not including broker fees). For those already eyeing EFA shares at $77.48/unit, this approach could look appealing.
Since the $69.00 strike is approximately 11% lower than the current trading price, there’s a chance the put will expire worthless. Current analytics indicate a significant 80% probability of this happening. Stock Options Channel will continuously monitor these odds, providing updates on our website. If the contract does expire worthless, the premium alone would give a return of 0.36% on the cash commitment, equivalent to 0.93% annualized, a metric we refer to as YieldBoost.
Call Option Strategy: Covered Call Insights
Shifting focus to the call side, the $78.00 strike price call option has a current bid of 64 cents. If an investor buys EFA at its current price of $77.48 and then sells this call as a covered call, they are agreeing to sell the shares at $78.00. Adding the received premium means there could be a total return of 1.50% if the shares are called away at April 2025 expiration (excluding any dividends and before commissions). However, if EFA performs well, being capped at $78.00 could limit potential gains, making it crucial to analyze both its trading history and underlying business fundamentals.
The $78.00 strike represents a slight 1% premium to today’s price, which introduces the possibility of the covered call expiring worthless, allowing the investor to retain both the shares and the premium collected. Current analytics show a 47% chance of this occurring. Stock Options Channel will keep track of these probabilities and share them on our website, along with a chart of the option contract’s trading history. Should the covered call expire worthless, the premium would add a 0.83% return boost for the investor, or 2.12% annualized, labeled as YieldBoost.
Volatility Insights and Further Options
The put contract reflects an implied volatility of 26%, while the call contract shows an implied volatility of 14%. Meanwhile, the trailing twelve-month volatility calculated from the last 252 trading days and the current price of $77.48 stands at 13%. For additional options contract ideas, explore StockOptionsChannel.com.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
