Investors in Nu Holdings Ltd. (NYSE: NU) gained access to new options today, set to expire on November 20, 2023. The newly issued contracts offer opportunities for trading, particularly through a put contract at the $10.00 strike price, which has a current bid of $0.40. Around 170 days remain until expiration, allowing sellers to collect premiums that can enhance returns. The put at $10.00 represents a 12% discount from NU’s current trading price of $11.37, and the probability that the option will expire worthless is approximately 71%, indicating a potential 4% return on cash commitment if it does.
On the call side, a $13.00 strike price contract is available with a current bid of $0.39. Selling this as a covered call after purchasing shares at $11.37 could yield a total return of 17.77% if called away by expiration. This strike price reflects a 14% premium to the current price, and the likelihood of the contract expiring worthless is estimated at 52%, potentially generating a 3.43% extra return.
The implied volatilities for the put and call contracts are 82% and 64%, respectively, while the actual trailing twelve-month volatility stands at 39%.
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