Investors in Amazon.com Inc (AMZN) can now trade new options set to expire on October 16, 2023. The put contract at the $205.00 strike price offers a current bid of $18.25, resulting in an effective cost basis of $186.75 per share if exercised. This represents a 2% discount from the current trading price of $209.44, with a 62% chance the contract may expire worthless. If it does, the premium yields an 8.90% return on the cash commitment, equating to a 13.66% annualized rate.
Additionally, a call contract at the $220.00 strike price has a bid of $21.30. If investors buy shares at the current price and sell the covered call, they could achieve a total return of 15.21% if the stock is called away at expiration. This strike also represents a 5% premium to the current price, with a 48% chance the contract expires worthless, in which case investors retain both the premium and their shares.
Implied volatility for both contracts stands at approximately 36%, while the actual trailing twelve-month volatility is calculated at 35%.
