Interesting GLW Put And Call Options For December 19th

This analysis details options strategies for Corning Inc. (GLW), presenting a cash-secured put at the $65.00 strike that offers a potential 1.45% return (5.67% annualized) with an 83% chance of expiring worthless, effectively targeting a $64.06 entry price. Concurrently, a covered call at the $80.00 strike could generate an 8.47% total return by December 19th if exercised, or a 5.53% premium boost (21.70% annualized) with a 52% chance of expiring worthless. These strategies provide avenues to generate yield or acquire shares at a discount, with implied volatilities of 34-43% against a 32% trailing actual volatility.

Analysis

The provided text outlines two distinct options strategies for Corning Inc. (GLW), which is currently trading at $77.72 per share. The first strategy involves selling a cash-secured put at the $65.00 strike price. This approach allows an investor to either acquire shares at an effective cost basis of $64.06, a 16% discount to the current price, or generate a 1.45% return (5.67% annualized) if the option expires worthless, an outcome with a stated probability of 83%. The second strategy is a covered call for existing shareholders, involving selling the $80.00 strike call for a $4.30 premium. This could yield a total return of 8.47% if the stock is called away by the December 19th expiration or provide a 5.53% premium boost (21.70% annualized) if it expires worthless, which has a 52% probability. A key observation is the variance in volatility metrics: the implied volatility of the put (43%) and the call (34%) are both elevated compared to the trailing twelve-month actual volatility of 32%. This suggests that option premiums are currently rich relative to recent historical price action, enhancing the appeal of option-selling strategies.

Key Decisions for Investors

• Investors bullish on GLW but seeking a lower entry point could consider selling the $65.00 cash-secured put to either acquire the stock at an effective price of $64.06 or collect a 5.67% annualized premium.
• Current GLW shareholders could evaluate selling the $80.00 covered call to generate income, targeting an 8.47% total return by December if the stock is called away, while understanding this strategy caps upside potential above the $80 strike price.