Delving into Options for December 20th
As the trading day began, a wave of fresh options surfaced for investors in Coca-Cola Europacific Partners plc (Symbol: CCEP). These newly available options, set to expire on December 20th, brought with them a unique opportunity. With 275 days until expiration, the time value played a significant role in shaping the price that option buyers were willing to pay, creating potential avenues for sellers of puts or calls to secure a higher premium compared to contracts with a closer expiration date.
At Stock Options Channel, our YieldBoost formula meticulously combed through the CCEP options chain for these newly minted December 20th contracts. Among the myriad choices, one put and one call contract stood out, holding particular allure.
Eyeing the $50.00 Put Contract
The put contract at the $50.00 strike price beckoned with a current bid of 20 cents, presenting an intriguing prospect. Selling-to-open this put contract entailed an agreement to buy the stock at $50.00, augmented by collecting the premium, effectively anchoring the cost basis of the shares at $49.80 (pre-broker commissions). For an investor eyeing CCEP shares, this could prove to be an appealing alternative to the current market rate of $71.32 per share.
The $50.00 strike marked a roughly 30% markdown from the prevailing trading price, positioning it as an out-of-the-money contender. Consequently, there lingered the possibility of the put contract expiring as a non-entity. The prevailing analytical data, delving into Greeks and implied Greeks, hinted at an 89% likelihood of this scenario. Tracking these odds over time will be crucial, and Stock Options Channel vows to monitor them closely, even detailing them in a chart on our website. A potential worthless expiration would yield a 0.40% return on the cash commitment, translating to 0.53% annualized – a phenomenon we affectionately dub the YieldBoost.
Visualizing the Trailing Twelve-Month Trajectory
Below, a graphic unfurls the trailing twelve-month trading tapestry of Coca-Cola Europacific Partners plc, accentuating the position of the $50.00 strike amidst this historical evolution:
Exploring the $75.00 Call Contract
Shifting focus, the call contract at the $75.00 strike beckoned with a current bid of $1.50, enticing investors with its allure. Purchasing CCEP shares at the prevailing rate of $71.32 per share and subsequently selling-to-open this call contract as a “covered call” meant committing to offload the stock at $75.00. This transaction promised a total return (dividends excluded) of 7.26% should the stock be called away by the December 20th expiration (pre-broker commissions). Yet, if CCEP shares were to soar, the covered call seller might miss out on significant upside potential, underscoring the importance of delving into Coca-Cola’s historical trading journey and fundamental underpinnings.
Peering at the trailing twelve-month trail of Coca-Cola Europacific Partners plc, with the $75.00 strike emblazoned in red, provided additional context:
The $75.00 strike toted a roughly 5% premium to the ongoing trading price, marking it as an out-of-the-money candidate. Consequently, the covered call contract could potentially end up worthless, leaving the investor with both their shares and the collected premium. The prevailing analytical data, peering into greeks and implied greeks, indicated a 55% probability of this eventuality. Stock Options Channel pledges to monitor these odds steadfastly over time, even delineating them in an illustrative chart on our website. A potential barren expiration would furnish a 2.10% upsurge in return for the investor, equivalent to 2.79% annualized – christened lovingly as the YieldBoost.
Comparing Stats and Volatility
The put contract paraded an implied volatility of 40%, while its call contract counterpart boasted 18%. Meanwhile, the actual trailing twelve-month volatility hinged at 17%, seizing on the last 251 trading day closures alongside the present price of $71.32. For a plethora of put and call options contract insights worth exploring, do make a pit stop at StockOptionsChannel.com.
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The viewpoints and sentiments articulated herein are a manifestation of the author’s perspective and do not necessarily mirror those of Nasdaq, Inc.
