July 11th Options Now Available For Mondelez International (MDLZ)

Investors selling-to-open MDLZ put options at the $65 strike price, currently bid at 10 cents, commit to buying the stock at $65, effectively reducing their cost basis to $64.90, representing a potential 4% discount to the current $67.38 share price. With a 63% probability of expiring worthless, the premium offers a 0.15% return on cash commitment, or 1.31% annualized, while the implied volatility of the put contract is 27% versus a trailing twelve month volatility of 21%.

Analysis

The article details a specific options strategy for Mondelez International (MDLZ), involving selling-to-open a put contract at a $65.00 strike price with a current bid of $0.10. This strategy presents two primary outcomes for an investor: either acquiring MDLZ shares at an effective cost basis of $64.90 (strike less premium), which represents an approximate 4% discount to the current trading price of $67.38, or, if the put expires worthless, earning a premium income of 0.15% on the cash commitment (annualized at 1.31%, termed 'YieldBoost'). The article notes a 63% probability of the option expiring worthless based on current analytical data. Significantly, the implied volatility for this put contract is 27%, which is notably higher than Mondelez's actual trailing twelve-month historical volatility of 21% (calculated over the last 250 trading days). This discrepancy suggests that option sellers are currently being compensated for a higher perceived future price movement than what has been historically observed, or that market expectations for near-term volatility are elevated, making the premium potentially more attractive.

Key Decisions for Investors

• Investors with a bullish outlook on Mondelez International (MDLZ) who are interested in acquiring shares at a potential discount to the current market price, or generating income, could consider selling the $65.00 strike put option, understanding the obligation to purchase shares at an effective cost of $64.90 if MDLZ trades below $65.00 at expiration.
• The observed spread between the put contract's implied volatility of 27% and the stock's historical volatility of 21% suggests that option premiums might be relatively rich; therefore, selling volatility could be an attractive strategy, though this also implies heightened market expectation of price swings.
• Investors should monitor the evolving probability of the option expiring worthless, as indicated by Stock Options Channel, and MDLZ's share price relative to the $65.00 strike to manage the position and assess risk-reward dynamics continuously.