Investors in the iShares Trust – iShares 20+ Year Treasury Bond ETF (TLT) gained access to new options for the October 30th expiration on September 29, 2023. Notable among these is a put contract at the $80.00 strike price, currently bidding at $1.24, which offers a potential cost basis of $78.76 per share. This represents a 3% discount from TLT’s current trading price of $82.08, with a 66% chance of expiration without value.
Additionally, a call contract at the $85.00 strike price is available, bidding at $0.77. If executed as a covered call, it could yield a 4.50% return if TLT is called at expiration. This call also has a 73% probability of expiring worthless, allowing the investor to retain both shares and premium. Implied volatilities for the put and call are 13% and 12%, respectively, while the trailing volatility is calculated at 9%.
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