Investors in Labcorp Holdings Inc (NYSE: LH) can now trade new options that expire in May 2027, providing opportunities for both put and call sellers. The put contract with a $330 strike price currently bids at $19.20, allowing sellers to potentially acquire shares at an effective price of $310.80, approximately 3% lower than the current trading price of $338.51. The contract has a 63% chance of expiring worthless and offers a potential return of 5.82%, or 7.87% annualized, if it does.
Conversely, the call contract at a $360 strike price bids at $20.60. If an investor buys shares at the current price and sells this call as a covered call, they commit to selling at $360. This could yield a total return of 12.43% if exercised, though there’s a 54% chance it might expire worthless, allowing the investor to keep both the shares and the premium, which would represent a 6.09% additional return or 8.23% annualized.
The implied volatilities for the put and call contracts are 25% and 24%, respectively, while Labcorp’s actual trailing twelve-month volatility is calculated at 23%.
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