Options Trading Surges for Illinois Tool Works: A Potential Financial Opportunity
New Put and Call Contracts Introduced
Investors tracking Illinois Tool Works, Inc. (Symbol: ITW) will notice new options that started trading today, set to expire in September 2025. With 270 days until expiration, these new contracts may provide a chance for sellers of puts or calls to earn a higher premium compared to options with sooner expiration dates. Stock Options Channel has examined the options chain for ITW and identified one put and one call contract of particular interest.
The put contract at a $240.00 strike price currently has a bid of $6.80. If an investor chooses to sell-to-open this put contract, they must be prepared to buy the stock at $240.00, but they will also receive the premium, effectively lowering their cost basis to $233.20 per share (not including broker commissions). For someone looking to invest in ITW, this may be a more appealing option than purchasing shares at the current market price of $256.55 each.
Since the $240.00 strike price is about 6% lower than the current trading price—meaning it is out-of-the-money by that amount—there’s also a chance that this put contract expires worthless. Current analysis indicates a 72% likelihood of this occurring. Stock Options Channel will monitor these odds over time and provide updates on our website’s contract detail page. If the contract does expire worthless, the premium would yield a 2.83% return based on the cash commitment, translating to an annualized yield of 3.83%, a metric we refer to as YieldBoost.
Below is a chart showing the trailing twelve-month trading history for Illinois Tool Works, Inc., with the location of the $240.00 strike indicated in green:
Analysis of Call Options
On the calls side of the options chain, there is a call contract available at a $270.00 strike price, currently bid at $10.70. Should an investor buy ITW shares at $256.55 each and then sell-to-open this call contract as a “covered call,” they would agree to sell the stock at $270.00. This would yield a total return of 9.41% (excluding any dividends) if the stock is called away at the September 2025 expiration, assuming broker commissions are accounted for. However, should ITW shares increase significantly, the investor may miss out on additional gains. Analyzing both the trailing twelve-month trading history and the company’s fundamentals is essential for making informed decisions. Below is a chart showing ITW’s trading history, with the $270.00 strike highlighted in red:
The $270.00 strike price represents a roughly 5% premium over the current trading price, meaning it is also out-of-the-money by that percentage. This brings up the possibility that the covered call contract could expire worthless, allowing the investor to retain both their shares and the collected premium. Present data shows a 54% chance of this outcome. Stock Options Channel will monitor these odds and update our website’s contract detail page regularly. If the covered call does expire worthless, the premium would add a 4.17% return, annualized to 5.64%, also identified as YieldBoost.
For the put contract, the implied volatility stands at 21%, while the call has an implied volatility of 18%. In contrast, the actual trailing twelve-month volatility, calculated using the last 250 trading days alongside today’s price of $256.55, is estimated at 15%. Investors interested in more options contract ideas can visit StockOptionsChannel.com.
Top YieldBoost Calls of S.A.F.E. Dividend Stocks »
Additional Resources:
- PHK market cap history
- BDMS Historical Stock Prices
- Mondelez International RSI
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
