New Options Trading for Avantis U.S. Large Cap Value ETF

Investors in the Avantis U.S. Large Cap Value ETF (Symbol: AVLV) are seeing new options commence trading this week, specifically for the expiration date of November 21st. A significant factor influencing the premiums buyers will pay for options is the time value; with 241 days until expiration, these new contracts may allow sellers of puts or calls to earn higher premiums compared to contracts with closer expiration dates. At Stock Options Channel, our YieldBoost formula has reviewed the AVLV options chain and identified one put and one call contract of particular interest.

Put Contract Insights

The put contract at the $66.00 strike price currently bids at 10 cents. An investor selling-to-open this put contract would commit to purchasing the stock at $66.00 while also collecting the premium. This arrangement effectively lowers the cost basis of shares to $65.90 (before broker commissions). For an investor already looking to buy shares of AVLV, this represents an appealing alternative to the current market price of $66.64 per share.

Since the $66.00 strike price yields approximately a 1% discount from the current trading price (indicating it is out-of-the-money by that percentage), there is a chance the put contract could expire worthless. Current analytical data, including key metrics (the greeks), suggest a 61% probability of this occurring. Stock Options Channel will monitor these odds over time and publish a chart detailing their evolution on our website under the contract details for this option. Should the contract expire worthless, the premium received would amount to a 0.15% return on the cash commitment, translating to a 0.23% annualized yield—an amount we refer to as the YieldBoost.

Visualizing Trading History

Below is a chart illustrating the trailing twelve-month trading history for the Avantis U.S. Large Cap Value ETF, with the position of the $66.00 strike highlighted in green:

Call Contract Insights

Turning to the call side, the contract at the $68.00 strike price has a current bid of 50 cents. If an investor purchases AVLV shares at the current price of $66.64 and sells-to-open this call contract as a covered call, they commit to selling the stock at $68.00. Including the premium received, this would yield a total return (excluding dividends) of 2.79% if the stock is called away at the November 21st expiration. Care should be taken, as significant upside may still remain if the AVLV shares appreciate considerably.

To gain insights, it is critical to analyze the trailing twelve-month trading history for the Avantis U.S. Large Cap Value ETF along with the business fundamentals. Below is a chart depicting AVLV’s trailing twelve-month trading activity, highlighting the $68.00 strike in red:

The $68.00 strike represents roughly a 2% premium over the current trading price (making it out-of-the-money by that margin). Thus, there is a possibility that the covered call could also expire worthless, allowing the investor to retain both their shares and the collected premium. Current analysis shows a 48% probability of this occurrence. Stock Options Channel will continue tracking these odds and provide updates on our website under the contract detail page for this option. Should the covered call contract expire worthless, the premium collected would yield an additional 0.75% return to the investor, or approximately 1.14% annualized, also referred to as the YieldBoost.

The implied volatility for the put contract is currently at 16%, whereas the call contract shows an implied volatility of 14%. Meanwhile, we calculated the actual trailing twelve-month volatility—using the last 250 trading days and the present stock price of $66.64—to be 14%. For additional put and call options contract ideas, visit Stock Options Channel.

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.