Investors in Broadcom Inc (NASDAQ: AVGO) can begin trading new options with a May 13th expiration date as of today. A notable put contract is available at a $400.00 strike price, with a current bid of $13.85. Selling to open this put contract would result in a cost basis of $386.15 per share, reflecting a potential discount from the current trading price of $405.15/share.
Simultaneously, a call contract at a $410.00 strike price has a bid of $12.50. If investors purchase AVGO shares at $405.15 and sell this call as a “covered call,” they could achieve a total return of 4.28% if the stock price exceeds $410. This call is approximately 1% out-of-the-money, with a 55% likelihood of expiring worthless.
The implied volatility for the put contract stands at 49%, while the call contract’s implied volatility is 52%. The actual trailing twelve-month volatility is calculated at 42%.
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