New options for Select Sector SPDR Trust – State Street Health Care Select Sector SPDR ETF (XLV) began trading today for the expiration date of October 23rd. Investors can explore a put contract at the $170.00 strike price, currently bid at $2.69, which gives a potential cost basis of $167.31 if executed, representing a 1% discount from the current price of $171.76.
An accompanying call option at the $176.00 strike price, with a bid of $1.90, allows for a total return of 3.57% if exercised. Current data suggests a 60% chance that the put will expire worthless and a 62% chance for the call option, with both options exhibiting implied volatilities around 17%.
The analysis indicates a potential yield boost of 1.58% for the put and 1.11% for the covered call, annualizing to 11.55% and 8.08%, respectively, should both expire worthless.
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