Today marks the commencement of options trading for Old Republic International Corp. (Symbol: ORI) with an expiration date set for October 18th. For investors eyeing potential opportunities, the new options contracts with 246 days until expiration present a chance to leverage time value and potentially earn higher premiums than those with a closer expiration date. This, undoubtedly, paints an intriguing picture for both put and call sellers in the market.
An interesting insight gleaned from our YieldBoost formula focuses on the $22.50 strike price put contract, which currently holds a bid of a mere 5 cents. For investors considering selling-to-open this put contract, it entails a commitment to purchase the stock at $22.50, while also securing the premium. This effectively places the cost basis of the shares at $22.45 (before accounting for broker commissions). Surprisingly, for investors pondering ORI stock purchases, this seemingly minor detail could represent an alluring alternative to buying at $29.06/share today.
The $22.50 strike denotes an approximate 23% discount to the current stock trading price, inferring it to be out-of-the-money by that percentage. Consequently, there is a chance that the put contract may expire worthless. Currently, the analytical data, encompassing greeks and implied greeks, suggests an overwhelming 99% probability of this outcome. Tracking these odds over time will provide an insightful metric, with Stock Options Channel intending to publish a chart reflecting these numbers on the contract detail page. In the event of the contract expiring worthless, the premium would yield a 0.22% return on the cash commitment, or 0.33% annualized — known as the YieldBoost.
Additionally, we are juxtaposing the trailing twelve-month trading history for Old Republic International Corp. (see chart below), highlighting in green the position of the $22.50 strike in relation to this historical context.
In terms of volatility, our calculation for the actual trailing twelve-month volatility, taking into account the last 251 trading day closing values alongside today’s price of $29.06, stands at 20%. For more insights into put and call options contract opportunities, a visit to StockOptionsChannel.com is highly recommended.
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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.
