New Opportunities for SLV Investors
Today marked the emergence of fresh options for investors in Ishares Silver Trust (Symbol: SLV), with the May 31st expiration date shining the spotlight on potential strategies. Stock Options Channel’s YieldBoost formula uncovered intriguing developments within the SLV options chain, pinpointing one put and one call contract that demand attention.
The Attractive Put Contract
At the $25.00 strike price, a put contract has surfaced with a current bid of 70 cents. By selling-to-open this put contract, investors commit to acquiring the stock at $25.00, all while pocketing the premium. With the potential to reduce the cost basis to $24.30, this offers an enthralling alternative for those eyeing SLV shares at $25.43/share today.
Analyze and Assess
Given that the $25.00 strike indicates a roughly 2% markdown to the prevailing stock price (rendering it out-of-the-money), there lies the prospect that the put contract may end up worthless. Presently, with an estimated 65% chance of this outcome, the odds shall be vigilantly monitored by Stock Options Channel. The premium could deliver a 2.80% return on the cash commitment or a 20.44% annualized yield boost.
Charting the Course with Calls
On the calls front, a call contract at the $27.00 strike price is drawing attention, boasting a current bid of 76 cents. Should investors buy SLV shares at $25.43/share and execute a “covered call” by selling-to-open this contract, they agree to vend the stock at $27.00. The ensuing total return, excluding dividends, could reach 9.16% if the stock is called away at the May 31st expiration.
Strategic Insights
The $27.00 strike signifies an approximate 6% premium to the present stock price, indicating it is out-of-the-money by this percentage. While there is a 62% chance the covered call contract might expire worthless, the current analytics imply a 2.99% extra return in such an event. This equates to a 21.82% annualized YieldBoost, to the delight of investors.
Volatility and Analysis
Delving deeper, the put contract shows an implied volatility of 29%, while the call contract exhibits 32%. Contrasting this, the actual trailing twelve-month volatility, considering the last 251 trading day closing values alongside today’s price of $25.43, stands at 24%. For further options contract ideas, a visit to StockOptionsChannel.com may prove illuminating.
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The expressions within this piece mirror the views and opinions of the author, and may not necessarily align with those of Nasdaq, Inc.
