Options traders are looking at exciting opportunities as Aon plc (Symbol: AON) introduces new options for the October 18th expiration today. With 246 days until the expiration date, the newly traded contracts present a potential platform for sellers of puts or calls to achieve higher premiums than the options with a closer expiration date. Stock Options Channel’s YieldBoost formula has scrutinized the AON options chain for the new October 18th contracts and identified one put and one call contract of particular interest.
Put Contract Analysis
The put contract at the $310.00 strike price currently has a bid of $15.60. If an investor decides to sell-to-open that put contract, they commit to purchasing the stock at $310.00, also collecting the premium, effectively putting the cost basis of the shares at $294.40 (before broker commissions). This represents an attractive alternative for an investor interested in buying AON shares, given the possibility of achieving a 1% discount to the current trading price of the stock and the potential for the put contract to expire worthless, as suggested by the current analytical data (including greeks and implied greeks).
Should the put contract expire worthless, the premium would translate to a 5.03% return on the cash commitment, or 7.47% annualized, termed as the ‘YieldBoost’ by Stock Options Channel.
Call Contract Analysis
Turning to the calls side of the option chain, the call contract at the $320.00 strike price presents a different opportunity. With a current bid of $21.00, an investor purchasing shares of AON stock at the current price level of $312.19/share can sell-to-open that call contract as a “covered call,” committing to sell the stock at $320.00. This could lead to a total return of 9.23% (excluding dividends, if any) if the stock gets called away at the October 18th expiration. However, the investor might miss out on potential upside if AON shares perform exceptionally well.
The $320.00 strike represents an approximate 2% premium to the current trading price of the stock, indicating the possibility of the covered call contract expiring worthless. If this occurs, the investor would retain both their shares of stock and the premium collected. The current odds of that happening are 99%, and should the contract expire worthless, the premium would represent a 6.73% boost of extra return to the investor, or 9.98% annualized, termed the ‘YieldBoost’.
Meanwhile, the actual trailing twelve month volatility for Aon plc is calculated to be 20%. For more put and call options contract ideas worth considering, investors can visit StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
