Investors in Wabtec Corp (WAB) saw new options trading begin on October 9, 2023, for contracts expiring in May 2027. The newly traded put contract at a $290 strike price has a current bid of $21.40, allowing a potential purchase of WAB shares at a cost basis of $268.60, a 2% discount from the current market price of $294.67. Current analytical data suggests a 61% probability that the put contract may expire worthless, representing a possible return of 7.38%, or 9.26% annualized.
Additionally, a call contract available at the $310 strike price has a bid of $22.60. If purchased alongside shares at $294.67, it could yield a total return of 12.87% if called away by expiration. This strike represents a 5% premium from the current trading price, with a 50% chance of expiration without being exercised, translating into a potential yield boost of 7.67%, or 9.62% annualized.
The implied volatility for the put and call contracts is 28% and 27%, respectively, compared to an actual trailing twelve-month volatility of 26%.
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