New Options Trading for Elevance Health Provides Strategic Opportunities

Investors in Elevance Health Inc (Symbol: ELV) witnessed new options commence trading today, with an expiration date set for August 15th. The time value is crucial when determining the price an option buyer is prepared to pay, and with 128 days remaining until expiration, these new contracts may give sellers of puts or calls a chance to secure higher premiums compared to contracts expiring sooner. Our YieldBoost formula at Stock Options Channel has scanned the ELV options chain and pinpointed one put and one call contract worthy of attention.

Examining the Put Contract

The put contract with a $420.00 strike price currently holds a bid of $25.00. If an investor decides to sell-to-open this put contract, they would be agreeing to purchase the stock at $420.00, while also collecting the premium, resulting in an effective cost basis of $395.00 per share (before broker commissions). For investors already interested in acquiring ELV shares, this option presents a potentially attractive alternative to buying at the current market price of $428.30/share.

This $420.00 strike price offers an approximate 2% discount to the current trading price, indicating that it is out-of-the-money by that margin. Current data suggests there is a 61% chance that the put contract could expire worthless. Stock Options Channel will monitor these odds over time, displaying updates on our website under the contract detail page. If the contract expires worthless, the premium represents a 5.95% return on the cash commitment, equating to 16.97% on an annualized basis—an outcome we refer to as YieldBoost.

Here is a chart illustrating Elevance Health Inc’s trailing twelve months of trading history, highlighting the $420.00 strike position:

Analyzing the Call Contract

On the calls side, the call contract with a $440.00 strike price currently offers a bid of $31.30. Investors interested in buying shares of ELV at the existing price of $428.30/share could opt to sell-to-open this call contract as a “covered call,” inevitably agreeing to sell the stock at $440.00. By also collecting the premium, this strategy could yield a total return of 10.04% if the stock is called away by August 15th (excluding dividends and broker commissions). However, it is worth noting that a significant upside could be foregone if ELV shares rise substantially, which emphasizes the importance of assessing both the trading history and business fundamentals.

Below is a chart showcasing ELV’s trailing twelve month trading history, with the $440.00 strike price highlighted:

The $440.00 strike price represents a roughly 3% premium over the current trading price, indicating it is out-of-the-money by that percentage. This entails a possibility that the covered call contract could also expire worthless, allowing investors to retain both their shares and the premium. Current analytical data projects a 48% chance of this occurrence. Monitoring these odds over time is a focus for Stock Options Channel, which will chart these figures and the overall trading history of the option contract. If the covered call expires worthless, the collected premium would boost the investor’s return by 7.31%, or 20.84% annualized, reflecting another aspect of our YieldBoost.

The implied volatility for the put contract is calculated at 37%, while the call contract shows an implied volatility of 36%. In contrast, we calculate the actual trailing twelve month volatility—based on the last 251 trading days and today’s price of $428.30—to be 27%. For additional options contract insights, consider visiting StockOptionsChannel.com.

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