Investors in Southern Copper Corp (SCCO) witnessed the start of new options trading today for contracts expiring on July 17th. Notably, a put contract at a $190 strike price has a current bid of $15.90, allowing investors to effectively buy shares at a cost basis of $174.10 if executed, which represents a 4% discount from the current stock price of $196.94. These put options have an estimated 61% chance of expiring worthless, offering a potential 8.37% return on cash commitment if they do.
On the call options side, a contract at a $200 strike price is currently priced at $18.50. If an investor sells this as a covered call after buying shares at $196.94, they could see a total return of 10.95%, excluding dividends, if the stock is called away by expiration. This call option has a 46% chance of expiring worthless, resulting in a potential 9.39% boost to returns. Both contracts reflect an implied volatility of around 54%-55%, compared to the trailing volatility of 45%.
