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American Eagle Outfitters, Inc. (Symbol: AEO) introduced new options for November 2026 expiration on [date]. Notably, a put contract at the $10.00 strike price has a bid of 70 cents, allowing investors to effectively purchase shares at a cost basis of $9.30. This represents approximately a 20% discount to the current trading price of $12.53 per share, with a 75% chance that the put contract could expire worthless, potentially yielding a 7.00% return on cash commitment or 5.65% annualized.
Additionally, a call contract at the $17.00 strike price has a bid of 95 cents. If an investor purchases shares at $12.53 and sells the call contract, they could achieve a total return of 43.26% if the stock is called away at expiration. The $17.00 strike price represents a 36% premium to the current trading price, and there is a 48% chance that this call contract could also expire worthless, creating a possible 7.58% return boost, equivalent to 6.12% annualized.
The implied volatilities for the put and call contracts are 81% and 78%, respectively, while the actual trailing twelve-month volatility is calculated at 59%.
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