November 21st Options Now Available For Thomson Reuters (TRI)

The article outlines options strategies for Thomson Reuters (TRI) shares, currently trading at $168.89, designed to optimize yield or entry price. Investors can sell a $165.00 put for a $2.80 premium, offering a potential 9.67% annualized return if the option expires worthless (63% probability) or an effective $162.20 purchase price if assigned. Alternatively, a covered call strategy, involving buying TRI shares and selling a $170.00 call for $5.00, yields a 3.62% return if shares are called away or a 16.87% annualized return if the call expires worthless (48% probability). These "YieldBoost" strategies leverage implied volatility around 25% to generate enhanced returns or acquire shares at a discount.

Analysis

The provided analysis outlines two distinct options-based strategies for Thomson Reuters (TRI), currently trading at $168.89/share, aimed at yield enhancement or discounted stock acquisition. The first strategy involves selling a cash-secured put at the $165.00 strike price for a $2.80 premium. This approach offers investors interested in owning TRI an opportunity to acquire shares at an effective cost basis of $162.20, or to generate a 9.67% annualized return on the cash commitment should the option expire worthless, an event with a stated 63% probability. The second strategy is a covered call, where an investor holding shares sells the $170.00 strike call for a $5.00 premium. This can generate a total return of 3.62% if the stock is called away or provide a 16.87% annualized yield boost if the option expires out-of-the-money, which is assigned a 48% probability. Critically, the implied volatility for these options is approximately 25%, slightly above the trailing twelve-month actual volatility of 23%, suggesting that the premiums collected from selling these options are marginally rich relative to the stock's recent price behavior, enhancing the appeal of these income-generating strategies.

Key Decisions for Investors

• Investors bullish on TRI who are seeking a lower entry point than the current market price should evaluate selling the $165.00 strike put to either acquire shares at an effective cost of $162.20 or collect a 9.67% annualized yield.
• Current shareholders of TRI looking to generate income from their position could consider implementing the covered call strategy by selling the $170.00 strike call, which offers a potential 16.87% annualized yield boost but caps upside potential above the strike price.
• The slight premium of implied volatility (25%) over historical volatility (23%) makes selling options on TRI moderately attractive, however, investors must weigh the income potential against the specific risks of each strategy, namely the obligation to buy the stock in a downturn or forfeit significant upside in a sharp rally.