Investors in the iShares MSCI EAFE ETF (EFA) saw new options trading commence today for the March 2027 expiration. Notably, a put contract at the $92.00 strike price is currently bidding at $2.50, allowing an investor to commit to purchasing shares at that price while effectively reducing their cost basis to $89.50, representing a 6% discount to EFA’s current trading price of $97.68. The probability of this put contract expiring worthless is estimated at 67%.
On the calls side, a contract at the $100.00 strike price has a current bid of $4.50. If shares are purchased at $97.68, selling this call would commit the investor to selling at $100.00, yielding a total return of 6.98% if exercised. This call is priced approximately 2% above the current stock price, with a 51% chance of expiring worthless, which would allow the investor to maintain both their shares and the premium collected. Implied volatility for both contracts stands at around 21%.
