Opportunity in the Options Market

As the week kicked off, investors in Deutsche Bank AG (Symbol: DB) were greeted with the availability of new options for the upcoming October 18th expiration. One critical factor influencing option prices is time value. With 205 days until expiration, the freshly minted contracts provide a potential window for put or call sellers to fetch a premium higher than what could be achieved with nearer expiration dates. At Stock Options Channel, our YieldBoost formula diligently scanned the DB options chain for the new October 18th contracts and pinpointed one put and one call contract that piqued interest.

The Put Contract Opportunity

Looking at the put side, the $14.00 strike price boasts a current bid of 40 cents. Selling-to-open this put contract would entail committing to buy the stock at $14.00 while pocketing the premium, effectively reducing the cost basis to $13.60 per share (excluding broker commissions). For an investor eyeing DB shares, this presents an appealing avenue compared to the current trading price of $15.87/share.

Exploring the Call Options Terrain

Shifting to the calls side, the $16.00 strike call contract holds a bid of $1.00. Purchasing DB shares at $15.87/share and selling-to-open this call as a “covered call” commits to sell the stock at $16.00. With the premium factored in, the potential total return stands at 7.12%, should the stock be called away at the October 18th expiration (before broker commissions). However, the upside potential might be curtailed if DB shares indeed soar, demanding a careful scrutiny of DB’s trading history and business fundamentals.

Insightful Analytical Data

Analytically, the $14.00 put contract holds a 75% chance of expiring worthless, offering a 2.86% cash commitment return or 5.09% annualized. Meanwhile, the $16.00 call contract has a 44% probability of expiring worthless, rendering a 6.30% additional return boost or 11.22% annualized to investors. Furthermore, the implied volatility in the put and call contracts is 33% and 34%, respectively, while the trailing twelve-month volatility stands at 27%.

Looking Ahead

For further options contract ideas and insights, a visit to StockOptionsChannel.com is recommended. The week has unfurled a plethora of possibilities for DB investors, beckoning them to tread the options landscape with caution and foresight.

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