New Option Contracts Unveiled for Bath & Body Works Investors

Investors in Bath & Body Works Inc (Symbol: BBWI) gained access to new options with a June 13th expiration today. Our YieldBoost formula identified one call and one put contract of particular interest within the BBWI options chain.

Insights on the $27.00 Put Contract

The put contract at the $27.00 strike has a current bid of 90 cents. If an investor sells-to-open this put contract, they commit to purchasing the stock at $27.00 while collecting the premium. This lowers the effective cost basis to $26.10 per share (excluding broker commissions). This option may appeal to those looking to buy BBWI shares at a lower entry point compared to the current price of $30.51 per share.

The $27.00 strike price represents about a 12% discount to the current trading price, indicating it is out-of-the-money by that percentage. Current analytical data indicates a 72% probability that this put contract could expire worthless. Over time, Stock Options Channel will monitor and publish a chart of these odds.

Should the contract expire worthless, the premium would yield a 3.33% return on the cash commitment, equivalent to an annualized return of 28.29%, which we term as YieldBoost.

Examining the $31.00 Call Contract

On the calls side, the contract at the $31.00 strike price has a bid of $1.55. If an investor buys shares of BBWI at the current price of $30.51 and sells-to-open this call contract as a “covered call,” they agree to sell the stock at $31.00. After factoring in the premium, this could yield a total return of 6.69% if the stock is called away at expiration, excluding dividends and broker commissions.

However, potential upside could be sacrificed if BBWI shares rise significantly, emphasizing the importance of analyzing the company’s trailing twelve-month trading history and its fundamentals. Below is a chart depicting BBWI’s trading history, with the $31.00 strike highlighted in red:

The $31.00 strike price is approximately 2% above the current trading price, indicating it is slightly out-of-the-money. There is also a 47% chance that the covered call could expire worthless. In this scenario, the investor retains both the shares and the premium collected, leading to a 5.08% additional return or 43.12% on an annualized basis, also referred to as YieldBoost.

Volatility Metrics

Implied volatility for the put contract stands at 84%, while the call contract exhibits an implied volatility of 68%. Additionally, actual trailing twelve-month volatility, based on the last 250 trading days and the current price of $30.51, is calculated at 53%. For further options contract ideas, visit StockOptionsChannel.com.

Top YieldBoost Calls of the S&P 500 »

For additional insights, see:

• Top Dividend Stocks
• INSM Shares Outstanding History
• FMK YTD Return

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.