Investors in Intuitive Surgical Inc (ISRG) began trading new options contracts today with an expiration date set for August 21. A notable put contract at the $445 strike price has a current bid of $32, allowing investors to potentially acquire shares at a reduced price, effectively lowering the cost basis to $413, given current market conditions. This represents an attractive alternative to the current share price of $449.21.
On the call side, a contract at the $460 strike price is available with a bid of $36.30. If an investor commits to this covered call strategy and the stock is called away at expiration, they could see a total return of 10.48%. The premiums for both contracts suggest annualized returns of 19.30% and 21.69%, respectively, should they expire worthless.
Current market data indicates a 59% probability of the $445 put expiring worthless and a 47% chance for the $460 call. The implied volatility for the put is 37% and 38% for the call, in contrast to the actual trailing twelve-month volatility of 32%.
