Investors in Best Buy Inc (Symbol: BBY) have new options available, with expiration set for July 17th. The key data reveals that the put contract at a $57.50 strike price has a current bid of $1.25. Investors selling this put would commit to buying shares at $57.50, effectively reducing their cost basis to $56.25, a 7% discount from the current trading price of $61.74. It is estimated that there’s a 67% chance this contract could expire worthless, presenting a potential return of 2.17% on the cash commitment, or 8.44% annualized.
Additionally, a call contract at the $62.50 strike price is currently priced at $2.40. Investors purchasing BBY shares at $61.74 and selling this call would agree to sell shares at $62.50, leading to a 5.12% total return upon expiration, assuming the stock is called away. The likelihood of this contract expiring worthless is 51%, which would allow investors to retain both their shares and the premium, yielding an extra return of 3.89% or 15.09% annualized.
The implied volatility for the put contract is 41%, while for the call, it is 39%. The trailing twelve-month volatility, based on the last 250 trading days, is calculated at 34%.
