Investors in the iShares Trust – iShares Russell 2000 ETF (IWM) saw new options trading begin on October 18, 2023, for October 2027 contracts. Key highlights include a put contract at the $285 strike price with a current bid of $18.49, which could provide a 6.49% return on cash commitment if it expires worthless, supported by a 66% likelihood of that occurrence. The ETF is currently priced at $293.88, making the put contract an attractive alternative for potential buyers.
Additionally, a call contract at the $320 strike price has a bid of $20.50. If shares are purchased at $293.88 and the call is sold, the total return could reach 15.86% if exercised, although there is a 53% chance the contract could expire worthless, allowing the investor to keep both the shares and the premium.
Implied volatility stands at 23% for the put and 21% for the call, with a historical volatility of 19% based on the last 251 trading days.
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