Investors in Brookfield Corp (BN) can now trade new options with an expiration date of August 21st. The put contract at a $45.00 strike price has a current bid of 35 cents, potentially allowing investors to purchase shares at an effective cost basis of $44.65 if the contract is exercised. This represents a 1% discount to the current share price of $45.44. The estimated odds of this put contract expiring worthless are 57%, potentially yielding a 0.78% return on the cash committed, or 3.12% annualized.
Additionally, a call contract at the $46.00 strike price has a current bid of 75 cents. By selling this covered call after purchasing shares at $45.44, investors could achieve a total return of 2.88% at expiration, with a 48% chance of the contract expiring worthless, allowing them to retain both shares and the premium. This premium could represent a 1.65% additional return, or 6.62% annualized.
The implied volatility for the put contract stands at 31%, while the call contract’s implied volatility is 32%. The actual trailing twelve-month volatility is calculated to be 28%.
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