Investors in Ford Motor Co. (F) saw new options begin trading today, with contracts set to expire on May 1. A noteworthy put contract is available at the $11.50 strike price, currently bidding at $1.66. Selling this put obligates the investor to buy shares at $11.50 but adjusts the effective cost basis to $9.84, assuming the share price is $12.06. This represents a potential discount of about 5% from the current price, with a 63% chance of the put expiring worthless, yielding a return of 14.43% on cash commitment.
On the calls side, a contract at the $13.00 strike is bidding at $1.57. An investor purchasing shares at $12.06 and selling this covered call would commit to selling at $13.00, with a potential total return of 20.81% if the stock is called away at expiration. This strike is approximately 8% above the current price, presenting a 49% chance of expiring worthless, thus allowing the investor to retain shares and earn a premium, potentially yielding a 13.02% return. The implied volatilities for the put and call contracts stand at 123% and 115%, respectively.
