Investors in PulteGroup Inc (Symbol: PHM) saw the introduction of new options trading today with an expiration date set for November 20th. The notable option is a put contract with a $120.00 strike price currently bidding at $6.10. This position implies a purchase commitment at $120.00, effectively lowering the cost basis to $113.90 if exercised. This represents a roughly 3% discount to the current trading price of $124.33, with a 63% chance that the put contract could expire worthless, yielding a potential 5.08% return on cash commitments.
On the call side, a contract at the $130.00 strike price has a bid of $7.80. If investors buy shares at $124.33 and sell this contract as a covered call, they commit to sell the stock at $130.00, targeting a total return of 10.83% if the call is exercised. The call’s chances of expiring worthless sit at 52%, which would result in a 6.27% additional return. Implied volatility for the put is at 36%, while the call’s is at 39%, compared to an actual trailing twelve-month volatility of 34%.
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