December 2026 Options Now Available For AT&T

The article details two options strategies for AT&T (T) stock, currently priced at $25.43, aimed at enhancing yield. One strategy involves selling a cash-secured put at the $23.00 strike for a $1.42 premium, offering a 6.17% return if it expires worthless (67% probability) or a $21.58 cost basis if assigned. The other is a covered call strategy, selling a $30.00 strike call for $1.28, which could yield a 23.00% total return if the stock is called away by December 2026, or a 5.03% premium boost if the option expires worthless (57% probability). These strategies leverage implied volatilities of 43% for the put and 40% for the call, notably higher than T's 23% historical volatility.

Analysis

The article presents two distinct options strategies for AT&T (T) stock, currently trading at $25.43, aimed at either reducing acquisition cost or enhancing yield. A cash-secured put strategy involves selling the $23.00 strike put for a $1.42 premium, potentially lowering the effective purchase price to $21.58 if assigned, representing a 10% discount to the current market price. Conversely, a covered call strategy entails selling a $30.00 strike call for $1.28 against owned shares, which could yield a 23.00% total return if the stock is called away by December 2026.

The $23.00 put has a 67% probability of expiring worthless, offering a 6.17% return on the cash commitment (5.43% annualized) as a "YieldBoost." Similarly, the $30.00 covered call has a 57% chance of expiring worthless, providing a 5.03% premium boost (4.43% annualized) while allowing the investor to retain the underlying shares. These probabilities highlight the likelihood of premium retention without assignment or call-away.

A notable observation is the disparity between implied and historical volatility; the put's implied volatility is 43% and the call's is 40%, significantly higher than AT&T's trailing twelve-month actual volatility of 23%. This elevated implied volatility suggests that options premiums are currently rich, potentially offering attractive income opportunities for options sellers relative to the stock's historical price movements.

Key Decisions for Investors

• Investors interested in AT&T (T) should consider utilizing cash-secured puts to potentially acquire shares at a 10% discount or covered calls to enhance yield on existing positions, leveraging the current options premiums.
• The significant spread between implied volatility (40-43%) and historical volatility (23%) suggests favorable conditions for options selling strategies, but also indicates higher market expectations for future price swings.
• Evaluate the trade-off between premium income and potential upside capture for covered calls, especially given the long-dated December 2026 expiration, and the commitment risk associated with selling puts.