Sanofi Options Trading Insights: Key Strikes and YieldBoosts

Investors in Sanofi (Symbol: SNY) have new options available for trading this week, set for expiration on May 16th. The Stock Options Channel has utilized its YieldBoost formula to analyze the SNY options chain. This analysis identified one put and one call contract that may attract investor interest.

Analyzing the Put Contract

The put contract at the $55.00 strike price currently has a bid of 35 cents. If an investor sells-to-open this put contract, they are agreeing to purchase the stock at $55.00 while also collecting the premium. This effectively reduces their cost basis for shares to $54.65 (before broker commissions). For investors wanting to buy shares of SNY, this option offers a potential savings compared to the current share price of $56.42.

Importantly, the $55.00 strike price represents approximately a 3% discount from the current trading price, indicating it is out-of-the-money by that percentage. Analytical data suggests a 59% probability that this put contract could expire worthless. The Stock Options Channel will monitor these probabilities over time, providing updates on our website. If the contract ends up worthless, the premium would yield a 0.64% return on the cash commitment, translating to an annualized return of 4.47%, referred to as the YieldBoost.

Visualizing the Trading History

Below is a chart showing the trailing twelve-month trading history for Sanofi, highlighting the position of the $55.00 strike in green:

Exploring the Call Contract

Turning to the calls, the contract at the $57.50 strike price has a bid of 50 cents. If an investor buys SNY shares at the current price of $56.42 and sells-to-open this call contract as a covered call, they are committing to sell the stock at $57.50. Collecting the premium adds value, yielding a total return of 2.80% if the stock is called away at the May 16th expiration (excluding any dividends and before broker commissions). However, investors should consider that if SNY shares significantly increase, they might miss out on further profit. Therefore, examining the twelve-month trading history and the company’s business fundamentals is key.

The chart below illustrates SNY’s trading history with the $57.50 strike highlighted in red:

Currently, the $57.50 strike is approximately a 2% premium to the current trading price, indicating a potential risk of the covered call contract expiring worthless. This poses an opportunity for investors to retain both their shares and the premium. With analytical data suggesting a 57% chance of the contract expiring worthless, results will also be charted on our website. Should the covered call end up worthless, the premium would provide an additional return of 0.89%, or an annualized 6.22%, coined as YieldBoost.

Volatility Insights

The implied volatility for the put contract stands at 23%, whereas the call contract holds a higher implied volatility of 31%. In comparison, we calculate the actual twelve-month trailing volatility—using the last 250 trading day closing values and the current price of $56.42—to be 23%. For more ideas on put and call options contracts, visit StockOptionsChannel.com.

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Additionally see:

• OFG Videos
• Top Ten Hedge Funds Holding IBHI
• BPMP market cap history

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