New Options Trading for Vanguard Mid-Cap Value Index VIPER: An Investor’s Guide

Investors in Vanguard Index Funds Mid-Cap Value Index VIPER Shs (Symbol: VNQ) received exciting news this week, with new options starting to trade for February 2025. Using its YieldBoost formula, Stock Options Channel analyzed VNQ’s options chain and identified significant contracts for both puts and calls.

Analyzing the Put Option: A Strategic Approach

The put contract at the $88.00 strike price currently has a bid of $1.85. An investor choosing to sell this put would agree to buy VNQ shares at $88.00 while collecting the premium, effectively lowering the cost basis to $86.15 (excluding brokers’ fees). For those already interested in VNQ, this alternative offers a better option compared to the current share price of $88.73.

This $88.00 strike is approximately 1% below the current trading price, classifying it as out-of-the-money. There’s a chance that this put could expire worthless, with current analytical data suggesting a 58% likelihood of this outcome. Stock Options Channel will monitor these odds over time and provide updates on our website. If the contract does expire worthless, the premium translates to a 2.10% return on cash commitment or an impressive 13.01% annualized return – what we term the YieldBoost.

Exploring the Call Option: Potential Gains Ahead

On the calls side, the call contract at the $90.00 strike has a current bid of $2.15. If an investor buys VNQ shares at the current price of $88.73 and sells this call as a covered call, they commit to sell at $90.00. This move would yield a total return (excluding dividends, if applicable) of 3.85% if the stock is called away by February 2025, before broker commissions. Investors should also note that if VNQ shares outperform, significant gains could be missed. Therefore, examining the past twelve months of trading history is vital.

The $90.00 strike represents an approximate 1% premium to the current stock price. The covered call could potentially expire worthless, allowing the investor to retain both the shares and the premium. Current data indicates a 54% chance of this happening, and our platform will keep track of these odds over time as well. If the covered call expires worthless, the premium offers a 2.42% additional return or 14.99% annualized, also known as the YieldBoost.

Understanding Volatility in Options Trading

The implied volatility for the put contract stands at 17%, while the call contract has an implied volatility of 19%. Comparing these figures with the actual trailing twelve month volatility, calculated at 16% based on the last 251 closing values and today’s price of $88.73, offers valuable context for potential traders. For further insights into other put and call options, StockOptionsChannel.com remains a resource for exploration.

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Also see:

• Top Stocks Held By Cathie Wood
• Funds Holding GRVY
• Funds Holding CWBC

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.