New Options Trading Sparks Interest in Republic Services (RSG)
Investors Eye February 2025 Contracts for Potential Gains
Today, Republic Services Inc (Symbol: RSG) launched new options for trading, set to expire in February 2025. The 70-day window until expiration could offer investors the chance to achieve higher premiums on puts or calls compared to those with nearer expiration dates. Using our YieldBoost formula at Stock Options Channel, we analyzed the new contracts and pinpointed two noteworthy options—one put and one call.
The put contract, with a strike price of $200.00, has a current bid of 70 cents. If an investor sells this put contract, they commit to buying the stock at $200.00 while receiving the premium, thus reducing their cost basis for shares to $199.30 (excluding broker fees). For someone interested in buying RSG shares, this could be a better choice than purchasing at the current price of $209.35 per share.
Since the $200.00 strike price is about 4% lower than the current trading price, there’s a possibility that this put could expire worthless—analytical data currently estimates the odds at 75%. At Stock Options Channel, we will monitor these odds over time and provide updates on our website, including a detailed chart. If this contract does expire worthless, the premium would yield a return of 0.35% on the cash commitment, equating to 1.82% annualized, a figure we categorize as YieldBoost.
Below, a chart depicts the past twelve months of trading history for Republic Services Inc, highlighting where the $200.00 strike price falls:
On the call side, we find a contract at a $220.00 strike price with a bid of 90 cents. An investor could buy RSG shares at the current level of $209.35/share and then sell this call contract, committing to sell at $220.00. Including the premium earned, this situation offers a total return of 5.52% (not counting any dividends) if the stock is called away by the February 2025 expiration. However, investors should consider the possibility of missing out on additional returns if RSG shares increase significantly. Evaluating the past trading performance and business fundamentals is crucial in this context.
Below is a chart illustrating RSG’s trailing twelve-month trading history, with the $220.00 strike price marked in red:
Given that the $220.00 strike price represents about a 5% premium over the current trading price, it’s also possible that this covered call could expire worthless, letting the investor keep both the shares and the premium received. Current analytical estimates suggest a 70% likelihood of this outcome. Stock Options Channel will track changes in these odds and present them, along with the trading history of the option contract. Should this covered call expire worthless, the premium would provide a 0.43% increase in returns, or 2.24% annualized, also classified as YieldBoost.
For the put option, implied volatility is at 20%, whereas the call option shows an implied volatility of 16%. Meanwhile, our assessment indicates that the actual trailing twelve-month volatility (from the last 251 trading days and today’s price of $209.35) stands at 14%. For additional options ideas, please 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.
