Investors in British American Tobacco plc (BTI) saw new options trading for December 2028 contracts begin today. The put contract at a $55.00 strike price currently has a bid of $5.50, allowing sellers to potentially lower their effective purchase price to $49.50. At the current share price of $57.13, this represents an approximate 4% discount. There is a 64% probability that the put contract will expire worthless, potentially yielding a 10% return on cash commitment, or 4.25% annualized.
On the call option side, the $60.00 strike price call contract has a bid of $4.50. If shares of BTI are purchased at $57.13 and the call is sold, the total return could be 12.90% if the stock is called away by December 2028. This strike price reflects a 5% premium over the current trading price, with a 55% chance of the call expiring worthless, resulting in a potential 7.88% additional return or 3.35% annualized.
The implied volatility for the put contract is 27% and for the call contract is 28%, while the trailing twelve-month volatility is calculated at 25%.
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