Investors in the Select Sector SPDR Trust – State Street Health Care Select Sector SPDR ETF (XLV) saw new options trading initiated today for the July 24th expiration. Notable contracts include a put at the $145.50 strike price, currently bid at $1.14, offering a potential cost basis of $144.36 for shares should it be exercised. This strike represents a 4% discount from the current share price of $152.13, with a 76% probability of expiring worthless.
Additionally, a call option at the $153.00 strike is trading at $2.31. If executed as a covered call against shares purchased at $152.13, it would yield a total return of 2.09% upon expiration, assuming the stock gets called away. This strike price represents a 1% premium to the current trading price, with a 52% chance of expiring worthless, yielding an annualized return of 11.08% if it does.
The implied volatility for the put is 18% and for the call is 17%, while the actual trailing twelve-month volatility sits at 15%.
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