Abbott Laboratories Options Trading: Key Insights for Investors
Investors in Abbott Laboratories (Symbol: ABT) saw new options begin trading today for the expiration dated June 6th. At Stock Options Channel, our YieldBoost formula analyzed the ABT options chain for these new contracts and identified one intriguing put and one call contract.
Put Contract Overview
The put contract at the $127.00 strike price has a current bid of $2.16. Selling to open this put contract means the investor commits to purchase the stock at $127.00, while also collecting the premium. This would effectively lower the cost basis of the shares to $124.84 (before broker commissions). For investors considering a buy of ABT shares at the current price of $128.62, this offer represents a potentially attractive alternative.
The $127.00 strike price reflects an approximate 1% discount to the current trading price of the stock, positioning it slightly out-of-the-money. Current analytical data indicates a 59% chance that this put contract could expire worthless. Stock Options Channel will monitor these odds over time, publishing updates and a chart on our website for this contract. Should the contract indeed expire worthless, the premium could yield a 1.70% return on the cash commitment, equating to an annualized return of 14.44%, which we term the YieldBoost.
Historical Trading Context
Below is a chart showing the trailing twelve-month trading history for Abbott Laboratories, indicating where the $127.00 strike aligns with that history:
Call Contract Insights
On the call side, a contract at the $131.00 strike price has a current bid of $2.74. If investors buy ABT shares at the current price of $128.62/share and then sell to open this call contract as a “covered call,” they would be agreeing to sell the stock at $131.00. Including the collected premium, this positions an investor for a total return of 3.98% if the stock is called away at expiration (excluding dividends and before broker commissions). However, if ABT shares significantly increase in value, substantial upside may be left unrealized. Therefore, analyzing Abbott’s trailing twelve-month trading history and business fundamentals is crucial.
Below is a chart illustrating ABT’s trailing twelve-month trading history, highlighting the $131.00 strike price:
This $131.00 strike represents about a 2% premium over the current stock price. As such, there exists the possibility that the covered call could also expire worthless. In this instance, the investor retains their shares and the premium collected. Current data suggests a 55% probability for this outcome. Stock Options Channel will be tracking and updating these odds on our website along with a chart of the trading history for the option contract. Should the covered call expire worthless, the premium would yield an additional 2.13% return, or 18.08% annualized, which we also refer to as the YieldBoost.
Volatility Insights
In the put contract example, the implied volatility stands at 22%, while the call contract example shows an implied volatility of 26%. Our calculations indicate that the actual trailing twelve-month volatility, based on the last 250 trading day closing values and today’s price of $128.62, is approximately 21%. For additional put and call option contract opportunities, please explore StockOptionsChannel.com.
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The views and opinions expressed herein are those of the author and do not necessarily reflect any institution’s views.
