Investors in the Vanguard FTSE Emerging Markets Exchange Traded Fund (Symbol: VWO) can trade new options starting today, set to expire on October 16th. The options chain includes a put contract with a $58.00 strike price, currently bid at 60 cents, allowing for a potential cost basis of $57.40 per share for investors willing to purchase at that price. This represents a 2% discount to VWO’s current price of $58.95, with a 60% likelihood that the contract could expire worthless.
On the call side, a contract at the $60.00 strike price is available with a bid of $1.00. An investor could generate a total return of 3.48% by selling this call if the stock is sold at expiration, while retaining the potential upside if share prices rise. Current data suggests a 51% chance this contract will expire worthless.
Implied volatility for both the put and call contracts is around 26%. In contrast, the actual trailing twelve-month volatility is calculated to be 17%.
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