Investors in the VanEck ETF Trust – Semiconductor ETF (SMH) received access to new options contracts today, set to expire on July 15. Notably, a put option at a $580 strike price is currently bid at $13.25, allowing an investor to effectively purchase shares at an adjusted cost of $566.75, a 1% discount from today’s trading price of $584.15. The likelihood of this put expiring worthless is estimated at 58%, which could yield a 2.28% return on cash commitment (119.12% annualized) if it does.
Conversely, a call option at the $595 strike price is bidding at $14.10. For an investor buying SMH shares, selling this covered call could yield a potential total return of 4.27% if exercised by expiration. This call has a 54% chance of expiring worthless, allowing the investor to retain both shares and premium, translating to an extra return of 2.41% (125.86% annualized) if it does.
Both options are exhibiting an implied volatility of approximately 56%, while the actual trailing twelve-month volatility stands at 36%.
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