Investors in Franco-Nevada Corp (FNV) can now trade new options set to expire on June 18, 2023. The $230.00 put contract is currently bid at $16.90, which allows investors to potentially purchase shares at a reduced cost basis of $213.10, assuming they are willing to buy the stock. This put option has a 56% chance of expiring worthless, offering a possible 7.35% return on the cash commitment, or 32.31% annualized.
On the call side, a $240.00 strike price call contract is bid at $14.70. If investors buy shares at $231.84 and sell this call, they could see a total return of 9.86% if exercised, with a 52% chance of expiring worthless. If the contract doesn’t get called, the investor retains both shares and the premium, representing a 6.34% additional return, or 27.88% annualized. The implied volatility for the put is 45% and for the call, 44%, compared to an actual trailing volatility of 37%.
