Investors in Broadcom Inc (AVGO) saw new options available today, set to expire on July 8. Notably, a put contract at a $380.00 strike price has a bid of $8.80, potentially allowing investors to commit to buying shares at that price, effectively lowering their cost basis to $371.20, which is approximately a 2% discount from the current price of $389.48 per share. The probability of this put option expiring worthless stands at 63%.
On the call side, a contract at the $400.00 strike price has a current bid of $9.55. If an investor purchases shares at $389.48 and sells this call, they would commit to selling at $400.00, yielding a total return of 5.15% if called away by expiration. The chance of this covered call expiring worthless is estimated at 58%. Both options reflect high implied volatilities, 47% for the put and 48% for the call, while the actual trailing volatility is 46%.
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