CLX August 15th Options Begin Trading

The article discusses potential options strategies for Clorox Co (CLX). Selling a $120 put offers a 2.17% return if it expires worthless, while a covered call strategy at $125 yields 4.53% if the stock is called away, with both having a 57% chance of expiring worthless; implied volatility for the put and call options are 28% and 29% respectively, compared to a trailing twelve month volatility of 22%.

Analysis

The article details two specific options strategies for Clorox Co (CLX), which is currently trading at $121.64 per share. For investors interested in acquiring CLX, selling a put contract at the $120.00 strike price, with a current bid of $2.60, could result in an effective purchase price of $117.40 per share (before commissions) if assigned. Alternatively, if this put option, which is approximately 1% out-of-the-money, expires worthless (an event with a stated 57% probability), the seller would achieve a 2.17% return on the cash commitment, equating to a 13.64% annualized YieldBoost. For existing CLX shareholders, selling a covered call option at the $125.00 strike price, bid at $2.15, offers a potential total return of 4.53% (excluding dividends, before commissions) if the stock is called away by the August 15th expiration. Should this call option, approximately 3% out-of-the-money, expire worthless (also a 57% probability), the premium collected would provide a 1.77% additional return, or an 11.12% annualized YieldBoost. The implied volatility for the put option is 28% and for the call option is 29%, both of which are notably higher than CLX's actual trailing twelve-month volatility of 22%, suggesting that options markets are pricing in greater future price swings for CLX or that current option premiums are relatively rich.

Key Decisions for Investors

• Investors considering an entry into Clorox Co. could evaluate selling the $120 strike put to potentially acquire shares at an effective cost of $117.40 or generate a 2.17% premium return if the option expires worthless.
• Current Clorox shareholders seeking to enhance income could consider selling the $125 strike covered call, targeting a 4.53% return if called away or a 1.77% income boost if the option expires out-of-the-money, while understanding this caps upside potential above $125.