Investors in the Select Sector SPDR Trust – State Street Consumer Staples Select Sector SPDR ETF (XLP) can now engage with new options expiring on August 14. A notable put contract is available at the $82.00 strike price, with a current bid of 1 cent. Selling this contract requires an investor to buy shares at $82.00 but nets a premium, bringing the effective purchase price to $81.99, a 2% discount from the current trading price of $83.90. Analysts estimate a 66% probability that this contract could expire worthless.
On the call side, a contract at the $85.00 strike price has a bid of $1.25. If an investor sells this covered call after purchasing shares at $83.90, they can secure a total return of 2.80% if the stock is called away by the expiration. This strike price represents a 1% premium above the current price, with a 56% chance of expiring worthless while allowing investors to retain both the shares and the premium.
Implied volatility for the put is 21% and for the call is 16%. The historical trading volatility over the past twelve months is calculated at 13%.
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