Investors in Franco-Nevada Corp (FNV) saw new options begin trading today, September 18, 2023, with a total of 74 days until expiration. Key options include a put contract at a $210.00 strike price, currently bidding at $11.50, allowing an investor to potentially acquire shares at a cost basis of $198.50, representing a 1% discount from the current share price of $212.09. The odds of the put contract expiring worthless are assessed at 58%, which, if realized, would yield a 5.48% return on commitment or 27.01% annualized.
Additionally, a call contract at a $220.00 strike price is bidding at $12.10. If investors sell this call while owning shares, the total return would be about 9.43% if the stock is called away at expiration, excluding any dividends. The likelihood of the call expiring worthless is estimated at 52%, potentially providing a 5.71% supplemental return, or 28.14% annualized. Implied volatilities for the put and call contracts are 40% and 43%, respectively, with actual trailing twelve-month volatility calculated at 37%.
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