Investors in the iShares MSCI EAFE ETF (EFA) saw new options trading for October 30th, 2023, with 95 days until expiration. Notably, a put contract at an $85.00 strike price has a current bid of 1 cent, representing an 18% discount from EFA’s current trading price of $104.06. This situation presents a potential opportunity for investors, as the odds of the put option expiring worthless are estimated at 88%.
Additionally, a call contract at a $106.00 strike price has a current bid of $1.20. If an investor engages in a covered call strategy, they could achieve a total return of 3.02% if the stock is called away at expiration. The strike price represents a 2% premium to the current share price, with a 55% chance of expiring worthless, allowing the investor to retain both the shares and the premium collected.
The implied volatility for the put contract is 37%, while it’s 19% for the call contract. The trailing twelve-month volatility of EFA is recorded at 16%, based on the last 250 trading days and the current price.
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