Chevron Options Trading Update Reveals Attractive Investment Opportunities
Investors in Chevron Corporation (Symbol: CVX) witnessed new options begin trading today, with an expiration date set for July 18. One important aspect influencing the price an option buyer is willing to pay is the time value. With 100 days until expiration, these new trading contracts may offer sellers of puts or calls the chance to earn a higher premium than those available for contracts approaching expiration. At Stock Options Channel, our YieldBoost formula has scanned the CVX options chain, pinpointing one put and one call contract of particular interest.
Put Contract Details
The put contract at the $130.00 strike price currently has a bid of $7.35. If an investor opts to sell-to-open this put contract, they agree to buy shares of Stock at $130.00 but will also collect the premium. This action results in a cost basis of $122.65 per share (excluding broker commissions). For those already interested in acquiring CVX shares, this option offers a potential cost-effective alternative to the current price of $134.14 per share.
Notably, the $130.00 strike, which indicates a roughly 3% discount to the current trading price, carries the risk of expiring worthless. Data indicates that the odds of this scenario occurring are currently estimated at 62%. Stock Options Channel will track these odds over time, providing a chart on our website for this contract’s details. Should this contract expire without value, the premium would yield a return of 5.65% on the cash commitment or 20.64% annualized—what we term the YieldBoost.
Visualizing Trading History
Below is a chart showcasing Chevron Corporation’s trailing twelve-month trading history, with the $130.00 strike indicated in green:
Call Contract Opportunities
On the call side, the $135.00 strike call contract is currently bid at $10.00. If an investor purchases CVX shares at the prevailing price of $134.14 and sells this call contract as a “covered call,” they commit to selling the Stock at $135.00. By also collecting the premium, the total return—excluding any dividends—would stand at 8.10% if the Stock is called away at the July 18 expiration (before broker commissions). However, it’s essential to note that significant upside potential may be forfeited if CVX shares increase substantially.
Below is a chart displaying the CVX trailing twelve-month trading history, highlighting the $135.00 strike in red:
Given that the $135.00 strike represents approximately a 1% premium to the current trading price, it carries the risk of expiring worthless as well. Under such circumstances, investors would retain both their shares of Stock and the premium. Current analytics indicate a 45% probability of this happening, with Stock Options Channel tracking these changing odds over time. If the covered call expires worthless, the premium would deliver a 7.45% additional return or 27.21% annualized, also referred to as the YieldBoost.
Volatility Insights
The implied volatility for the put contract stands at 44%, while for the call contract it is 41%. Meanwhile, our calculations show that the actual trailing twelve-month volatility—factoring in the last 251 trading days along with today’s price of $134.14—is 23%. For additional options contract ideas, explore StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
