Investors in the Select Sector SPDR Trust – State Street Consumer Staples Select Sector SPDR ETF (XLP) saw new options available for expiration on June 26. A put contract at the $83.00 strike price has a current bid of 2 cents, allowing investors to purchase shares at an effective cost basis of $82.98 if executed, which is approximately a 1% discount from the current trading price of $83.46. The odds of the contract expiring worthless are estimated at 57%.
On the calls side, a call contract with a strike price of $84.00 has a current bid of 18 cents. Selling this call as a “covered call” could yield a total return of 0.86% if exercised by expiration, although there is a 51% chance the contract may expire worthless. This would allow investors to retain their shares and the premium earned, translating to a potential 1.57% annualized return from the premium alone.
The implied volatility for the put contract is 19%, while the call contract has an implied volatility of 18%. The actual trailing twelve-month volatility stands at 13%.
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