Investors in the Select Sector SPDR Trust – State Street Consumer Staples Select Sector SPDR ETF (XLP) can now trade new options set to expire on November 20th, 2023. A notable put contract at the $80.00 strike price has a current bid of 50 cents, which allows selling the option while potentially purchasing the shares at an effective price of $79.50, offering about a 6% discount from the current price of $85.22. The estimated probability of the put contract expiring worthless is 74%, yielding a potential return of 0.62% on the cash commitment or 2.68% annualized.
On the call side, a contract at the $95.00 strike price is currently bid at 22 cents. If an investor holds shares at $85.22 and sells this call, they could see an 11.73% return if the stock is called away at expiration, with a 74% chance of the contract expiring worthless while keeping both shares and the premium. Implied volatilities for the put and call options are 25% and 18%, respectively, while the trailing twelve-month volatility is 14%.
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