Investors in Arthur J. Gallagher & Co. (AJG) gained access to new option contracts with a September 18th expiration today. Notably, a put contract at a $210 strike price has a current bid of $9.10, effectively lowering the cost basis to $200.90 if sold-to-open. This represents a roughly 3% discount based on the current trading price of $215.60, with a 61% chance that the put could expire worthless—yielding a 4.33% return on the cash commitment.
On the call side, a $220 strike price call contract is currently bid at $12.30. Selling this as a covered call would obligate the seller to sell shares at $220, generating a total return of 7.75% if the stock is called away by September 18th. The likelihood of this call expiring worthless stands at 50%, offering a 5.71% yield boost if it does expire worthless.
Implied volatility for the put is at 33% and for the call at 36%, while the actual trailing twelve-month volatility calculated at 28%.
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