On August 1, 2023, Agnico Eagle Mines Ltd (AEM) introduced new options contracts. Notably, a put contract at the $118.00 strike price is offered with a bid of $4.10, allowing sellers to purchase shares at an effective cost of $113.90, approximately 2% lower than the current price of $120.94. The chances of this put expiring worthless are estimated at 62%, which could yield a 3.47% return on the cash commitment, equating to 25.36% annualized.
Additionally, a call contract at the $124.00 strike price is available with a bid of $5.40. If shares are purchased at $120.94 and the call is executed, investors would see a total return of 7% at expiration. The likelihood of this call expiring worthless stands at 52%, allowing investors to retain both shares and premium if that occurs, translating to a 4.47% yield boost or 32.59% annualized. Implied volatility for the put is 37% and for the call is 38%, while actual trailing volatility is calculated at 33%.
