Investors in Darling Ingredients Inc (Symbol: DAR) saw new options trading begin on October 4, 2023, for the April 2027 expiration. Key highlights include a put contract at the $67.50 strike price with a current bid of $5.40, allowing for a potential cost basis of $62.10 per share, which is approximately a 2% discount from the current trading price of $68.81/share. The odds of the put contract expiring worthless are currently estimated at 62%, providing an 8.00% return on the cash commitment or 12.22% annualized if it does expire worthless.
On the call side, a contract at the $72.50 strike price has a current bid of $6.10. If an investor purchases shares at $68.81 and sells this covered call, it could yield a total return of 14.23% if exercised, while the odds of the contract expiring worthless stand at 47%, equating to an 8.86% additional return or 13.54% annualized. Both contracts feature an implied volatility of approximately 40%.
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