Investors in Dow Inc (DOW) received new options on August 8, 2023. The put option at a $26.00 strike price has a current bid of $0.91, which allows investors to purchase stock at this price, effectively lowering their cost basis to $25.09 compared to the current market price of $27.28.
The $26.00 strike offers an approximately 5% discount to the current trading price, with a 64% probability of expiring worthless. If it does expire, the potential return on investment is 3.50%, or 29.71% annualized. Meanwhile, a call option at a $31.00 strike price is priced at $0.20, offering a 14% premium to the current stock price, with a 73% chance of it expiring worthless.
Should the call expire worthless, it would yield a 0.73% return or 6.22% annualized. The implied volatility for the put option is 40%, while for the call option it is 57%. The actual trailing twelve-month volatility is calculated at 37%.
