Exploring Options Strategies for iShares Trust – iShares iBoxx High Yield Corporate Bond ETF
Options traders following iShares Trust – iShares iBoxx High Yield Corporate Bond ETF (Symbol: HYG) witnessed the unveiling of new options on May 31st. Stock Options Channel’s YieldBoost algorithm delved into the HYG options landscape, pinpointing one put and one call contract that piqued interest.
A Glimpse of Opportunity: Put Options at $73.00 Strike Price
The $73.00 put option strike beckons investors with a bid of 2 cents. Opting to sell-to-open this contract implies a commitment to buying the stock at $73.00, offset by collecting a premium to lower the effective purchase price to $72.98 per share. For potential HYG shareholders, this alternative entices compared to the prevailing market rate of $76.28.
Upside Potential With Call Options at $79.00 Strike Price
On the calls front, the $79.00 call option strike carries a bid of 3 cents. By executing a “covered call” after purchasing HYG shares at $76.28 and then selling this contract, investors commit to selling the stock at $79.00. This strategy could yield a total return of 3.61%, excluding dividends, if the stock ascends post-expiration. However, vigilantly monitoring the stock’s trading history and business fundamentals is key, as depicted in the trailing twelve-month chart.
Comparing Possibilities: Put vs. Call Contracts
The $73.00 put implies a 4% discount, offering an 84% chance of expiring worthless. Conversely, the $79.00 call sits at a 4% premium, with an 80% probability of expiring unused. Notably, the implied volatility stands at 12% for puts and 10% for calls, while actual trailing volatility hovers around 6%.
Seeking Wisdom in Options Trading
For more insights into potential options strategies and actionable contract ideas, a visit to StockOptionsChannel.com may prove enlightening for HYG investors.
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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.
