Investors in the Select Sector SPDR Trust – State Street Consumer Staples Select Sector SPDR ETF (XLP) have new options available, expiring on October 30th. Notably, a put contract at the $79.50 strike price has a current bid of $0.50, which could lower the effective purchase cost of shares to $79.00, a 5% discount from the current trading price of $83.52. The probability of this put expiring worthless is estimated at 73%.
On the call side, a contract at the $87.00 strike price also has a current bid of $0.50. An investor purchasing XLP shares at $83.52 and selling this call would commit to selling at $87.00, potentially yielding a 4.77% return by expiration. The likelihood of this covered call expiring worthless is pegged at 65%. Implied volatilities for the put and call contracts are 18% and 24%, respectively.
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