Interesting CL Put And Call Options For January 2028

This analysis presents specific options strategies for Colgate-Palmolive (CL) stock, currently at $82.93, highlighting opportunities for yield enhancement or discounted share acquisition. Selling an $80.00 strike put for a $5.50 premium offers a 6.88% return (2.92% annualized) if it expires worthless, or an effective share cost of $74.50. Alternatively, a covered call using an $85.00 strike and $8.50 premium provides a potential 12.75% total return if shares are called away, or a 10.25% premium boost (4.36% annualized) if the call expires worthless, with implied volatilities of 23% and 22% respectively, against a 21% historical volatility.

Analysis

The analysis centers on two specific long-dated options strategies for Colgate-Palmolive (CL), currently trading at $82.93. The first strategy involves selling a January 2028 cash-secured put with an $80.00 strike price for a $5.50 premium. This approach creates an effective cost basis of $74.50 per share if assigned, representing a notable discount to the current market price. Alternatively, if the option expires worthless, which is given a 65% probability, the seller would realize a 6.88% return on the cash commitment, equivalent to a 2.92% annualized yield. The second strategy is a covered call, selling an $85.00 strike call for an $8.50 premium against shares purchased at $82.93. This could generate a total return of 12.75% if the stock is called away by the January 2028 expiration. If the call expires worthless, an event with a 42% probability, the premium provides a 10.25% return boost, or a 4.36% annualized yield. Critically, the implied volatilities of the put (23%) and call (22%) are slightly elevated compared to the stock's 21% trailing twelve-month historical volatility, suggesting that options are priced with a modest premium, which is favorable for sellers.

Key Decisions for Investors

• Investors seeking to acquire CL shares at a discount could consider selling the January 2028 $80 put, which establishes a potential entry point at an effective cost of $74.50 or generates a 2.92% annualized yield if the stock remains above the strike.
• Current CL shareholders aiming to enhance yield and who are willing to cap upside potential could implement the covered call strategy, which offers a 4.36% annualized yield boost or a total return of 12.75% if shares are called away.
• Given that implied volatility is trading at a slight premium to historical volatility, the current market conditions are marginally favorable for option-selling strategies that monetize this spread.
• Investors should note the long-dated nature of these January 2028 contracts, which requires a multi-year commitment of capital and a long-term view on the stock's price, introducing significant opportunity cost if CL's volatility or price trend changes dramatically.