Unveiling October 18th Options
Today, investors of Royal Bank of Canada (Montreal, Quebec) (RY) have gained access to new options expiring on October 18th. These fresh contracts, with 246 days until expiration, offer an opportunity for put or call sellers to command a higher premium than those with a closer expiration.
Put Option Insight
The put option at the $95.00 strike price stands out with a current bid of $2.10. Sellers of this put contract commit to purchasing the stock at $95.00, but also receive the premium, effectively reducing the cost basis of the shares to $92.90. For those eyeing RY shares, this presents an appealing alternative to the current $97.50/share price.
Calculating the Odds
Furthermore, with the $95.00 strike representing a 3% discount to the current trading price, there’s a chance the put contract could expire worthless. Current analytical data suggests a staggering 99% chance of this happening. Stock Options Channel will continue to monitor these odds over time.
Eyeing the Trailing Twelve Month Trading History
A chart displaying the trailing twelve month trading history for RY illustrates the $95.00 strike relative to historical data, offering investors valuable context for their decision-making.
Call Option Analysis
On the calls side, the call contract at the $100.00 strike price carries a bid of $3.30. Buying shares at the current $97.50/share price and selling-to-open this call contract as a “covered call” commits the seller to offload the stock at $100.00, resulting in a potential total return of 5.95% at the October 18th expiration (before broker commissions).
Considering Upside Potential
However, there’s the risk of missing out on significant upside if RY shares surge. Thus, understanding RY’s trailing twelve month trading history and business fundamentals is crucial here. Another chart highlighting the $100.00 strike aids in evaluating potential outcomes.
Weighing the Possibilities
Given that the $100.00 strike represents an approximate 3% premium to the current trading price, there’s a chance the covered call contract could expire worthless. Once again, odds of 99% favor this occurrence. Stock Options Channel will diligently track and publish these odds.
Concluding Insights
With the genuine potential for both premium income and stock purchase at a discount, the RY put and call options, amidst a trailing twelve month volatility of 18%, present a compelling proposition for astute investors seeking to bolster their portfolios.
Finding More Profitable Options
For more put and call options contract ideas, investors can explore StockOptionsChannel.com.
Also see:
Funds Holding UTEN, NZT Videos, AVEM Options Chain
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
