Investors in Broadcom Inc (AVGO) encountered new options trading today for contracts expiring on March 16. A put contract at a $310.00 strike price has a current bid of $14.75, allowing an investor to purchase shares at an effective cost basis of $295.25, reflecting a 1% discount to the current trading price of $314.12. There is a 57% probability that this put contract will expire worthless, offering a potential 4.76% return on cash commitment.
On the calls side, a $320.00 strike price call has a bid of $15.15. If the stock is bought at $314.12 and a covered call is sold, the total return could be 6.69% if the stock is called away at expiration. This call is 2% above the current trading price, with a 51% chance of expiring worthless, which would allow the investor to keep both the shares and the premium, representing a 4.82% return. Implied volatility is 73% for puts and 72% for calls, while the trailing twelve-month volatility stands at 49%.
