New Options for Avnet Inc: Analyzing Potential Opportunities

Investors in Avnet Inc (Symbol: AVT) noticed new options become available this week, set to expire on November 21st. The time value is a crucial element in the pricing of options; therefore, with 241 days until expiration, these newly available contracts may allow sellers of puts or calls to achieve higher premiums compared to contracts that expire sooner.

At Stock Options Channel, our YieldBoost formula evaluated the AVT options chain, identifying one put and one call contract that stand out. The put contract at the $46.00 strike price currently bears a bid of $2.00. If an investor opts to sell-to-open this put contract, they commit to purchasing the Stock at $46.00 while also securing the premium. This setup effectively adjusts the cost basis to $44.00, prior to any broker commissions. For those interested in buying shares of AVT, this option offers a potentially appealing alternative to the current market price of $48.90 per share.

This $46.00 strike represents a roughly 6% discount to the stock’s prevailing trading price, indicating that it is out-of-the-money by that percentage. Present analytical data, including greeks and implied greeks, indicate a 66% likelihood that the put contract may expire worthless. Over time, Stock Options Channel will monitor these odds, noting any fluctuations and updating our site with a chart of this data under the contract detail page for this contract. Should the contract indeed expire worthless, the premium would yield a 4.35% return on cash commitment, translating to an annualized yield of 6.58%, termed a YieldBoost.

Below is a chart illustrating the trailing twelve-month trading history for Avnet Inc, highlighting the position of the $46.00 strike price:

Next, examining the call side of the options chain, the call contract at the $50.00 strike price currently bids at $3.10. An investor purchasing AVT shares at the current price of $48.90 per share and selling a covered call at this strike price would agree to sell their shares at $50.00. In this scenario, the premium collected enhances total returns (excluding dividends) to 8.59% if the stock is called away at the November 21st expiration, before any broker commissions are applied. However, if AVT shares rise significantly, there may be substantial upside left untapped. Thus, assessing the trailing twelve-month trading history and the fundamentals of the business remains critical.

Here is the chart showing AVT’s trailing twelve-month trading history, with the $50.00 strike clearly marked:

The $50.00 strike represents an approximately 2% premium to the current stock price, categorizing it as out-of-the-money by that same percentage. Consequently, there’s a chance the covered call contract could also expire worthless, allowing the investor to retain both shares and the premium received. Current analytical data suggests a 47% probability of this occurrence. In keeping with our standard practices, Stock Options Channel will track these odds, noting any variations and providing corresponding historical charts on our website. Should this covered call contract expire worthless, the premium could enhance returns by 6.34%, or 9.60% on an annualized basis, also classified as a YieldBoost.

The implied volatility for the put contract example is 30%, while that for the call contract is 32%. Meanwhile, we calculate an actual trailing twelve-month volatility of 25%, based on the last 250 trading days’ closing values and the current price of $48.90. For further options contract ideas, both put and call, consider visiting StockOptionsChannel.com.

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also see:

• Stock Split History
• BRP YTD Return
• MFA Insider Buying

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.