Investors in the Select Sector SPDR Trust – State Street Health Care Select Sector SPDR ETF (Symbol: XLV) gained access to new options on August 28th. The notable contracts identified include a put option at a $154.00 strike price, currently bid at $0.98, allowing investors to potentially reduce their cost basis to $153.02. This represents a 6% discount from the current trading price of $162.99/share, with an estimated 80% chance of the option expiring worthless.
Additionally, a call option at a $171.00 strike price has a current bid of $1.09. By selling this covered call, investors could achieve a total return of 5.58% if the stock is called away, with a 73% likelihood it may expire worthless. The implied volatility for the put contract is 19%, while the call’s is 17%, compared to a trailing twelve-month volatility of 16%.
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