Investors in Costco Wholesale Corp (COST) gained access to new options expiring on December 19th, with 170 days until expiration. A put contract at the $980 strike price has a current bid of $51.10, allowing sellers to potentially acquire shares at a cost basis of $928.90, roughly 1% below the current trading price of $985.44. There is a 59% chance that this put contract will expire worthless, offering a possible 5.21% return on cash commitment, or 11.19% annualized.
On the calls side, a $1010 strike call has a bid of $58.20. Selling this call after buying shares at $985.44 could yield an 8.40% total return at expiration, excluding dividends. This strike represents a 2% premium to current prices with a 49% chance of expiring worthless, resulting in a potential 5.91% added return, or 12.68% annualized.
The implied volatility for both the put and call contracts is approximately 24%, while the actual trailing twelve-month volatility stands at 23%.
