Hershey Options Trading: New Opportunities for Investors
New options for Hershey Company (Symbol: HSY) started trading today, set to expire on December 13th. Stock Options Channel has examined the options chain, identifying a noteworthy put and call contract.
The put contract with a $170.00 strike price is currently bidding at $1.20. An investor selling this put contract commits to buy the stock for $170.00 and collects the premium, which effectively lowers the cost basis of the shares to $168.80 (before commissions). This option might appeal to those looking to buy shares of HSY, as the current market price stands at $178.49.
Since the $170.00 strike price is about 5% below the current stock price, there is a chance the put contract could expire worthless. Analysis indicates there’s roughly a 73% probability of this happening. Stock Options Channel will monitor these odds and provide updates on our website. Should the contract become worthless, the premium would yield a 0.71% return on the cash commitment, equating to an annualized return of 5.99%—referred to as the YieldBoost.
Below is a chart that shows Hershey Company’s trading history over the past twelve months, highlighting where the $170.00 strike price falls in relation to that history:
Now turning to the call side of the options market, there’s a call contract at the $180.00 strike price with a current bid of $4.60. If an investor purchases HSY shares at $178.49 and simultaneously sells this call as a “covered call,” they commit to selling the stock for $180.00. The total return—excluding dividends—would amount to 3.42% if the shares are called away by December 13th (before broker commissions). However, this strategy might limit potential gains if HSY shares appreciate significantly, underscoring the importance of analyzing the company’s fundamentals and trading history. Below, HSY’s twelve-month trading history is displayed, with the $180.00 strike price indicated in red:
The $180.00 strike represents a slight premium of about 1% to the current stock price, suggesting that the covered call could also expire worthless. If this occurs, the investor retains their shares and the premium earned. Current analysis hints at a 51% chance of this outcome. Stock Options Channel will also keep track of these odds and share the trading history of this option contract on our website. If the covered call expires worthless, the premium would contribute an additional return of 2.58% to the investor, translating to an annualized figure of 21.85%—also known as the YieldBoost.
The implied volatility for both contract types is around 26%. In contrast, the actual trailing twelve-month volatility, factoring in the last 251 trading days and the present price of $178.49, is calculated to be 20%. For more insights on put and call options worth considering, visit StockOptionsChannel.com.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
