Interesting FTV Put And Call Options For September 18th

FTV (Fortive Corp) is the subject of two options trade ideas: selling a $55 put at a $2.20 bid would obligate purchase at $55 and effectively set a cost basis of $52.80 versus the current price of $55.93, representing a 4.00% YieldBoost (5.94% annualized) with the article citing a 1% chance of the put expiring worthless. Alternatively, buying the stock at $55.93 and selling the $65 covered call for $0.50 offers a 17.11% total return if called at the September 18 expiration, or a 0.89% premium boost (1.33% annualized) with a cited 74% probability of the call expiring worthless; implied volatility on the call is 49% versus a trailing 12-month volatility of 27%.

Analysis

Market structure: The immediate winners are option premium sellers and income-oriented equity holders willing to be long FTV at a ~5% lower realized basis (sell Sep $55 put, collect $2.20 → effective $52.80). Elevated implied volatility (IV 49% vs realized 27%) signals outsized demand for tail protection or near-term event risk in FTV, which enriches market-makers and option sellers while penalizing volatility buyers and directional longs who pay the premium.

Risk assessment: Tail risks include an operational/earnings miss or an unexpected dividend/capex announcement that could spike IV >70% and force large mark-to-market losses for short-vol positions; assignment risk is immediate with Sep 18 expiry (days→weeks). Short-term (weeks to 3 months) risk is dominated by theta decay and IV moves around the Sep 18 window; medium/long-term (quarters) reverts to fundamentals—organic revenue/G&A execution—where FTV’s industrial exposure matters.

Trade implications: Given the IV premium vs realized vol, asymmetric income strategies favor sellers: (a) sell Sep 18 $65 covered calls at $0.50 if already long FTV for a 17.1% capped upside to $65 (total return if called) or (b) sell-to-open Sep $55 puts to obtain a $52.80 effective entry if willing to own the shares. Size each trade to 1–3% portfolio risk and set hard stop-buybacks (buy to close if FTV moves against you >6% or IV rises >15 vol points).

Contrarian angles: Consensus underprices the structural IV dislocation: if no material negative catalyst occurs by Sep 18, IV will compress toward realized (≈27%), creating profit for sellers; conversely, a true operational shock will make short-vol strategies painful. Historical pattern: post-event IV crushes are common—favor short-dated premium capture—but always tag positions with a protective long OTM put (e.g., $50 strike) sized to cap tail losses to ~1% portfolio value.

Key Decisions for Investors

• If bullish on owning FTV, establish a sell-to-open Sep 18 $55 put position (collect $2.20) sized so max notional = 1–3% of portfolio; target effective basis $52.80, and agree to hold ≥3 months if assigned; buy-to-close if FTV drops >6% pre-expiration or IV spikes >15 vol points.
• If already long FTV (or after assignment), sell-to-open Sep 18 $65 covered calls at $0.50 to harvest 0.89% yield (17.11% total if called); position size 1–3% portfolio, buy back calls if FTV >$63 or IV compresses by 10 vols to preserve upside exposure.
• Implement short-volatility income, not naked: pair each sold put/call with a protective long OTM put (e.g., buy $50 Sep put) sized to cap tail loss to ~1% portfolio; cost of hedge acceptable given 22 vol-point IV premium (49% vs 27%).
• Avoid one-sided large short-vol exposures into Sep 18; instead ladder expiries (30–90 days) and limit aggregate option delta exposure to ≤5% portfolio; reassess positions 7–10 trading days before FTV earnings or corporate events.