December 19th Options Now Available For AstraZeneca (AZN)

Analysis of AstraZeneca (AZN) options reveals potential strategies for investors seeking yield enhancement. Selling the $70 put offers a 3.77% return if it expires worthless, while a covered call strategy at the $75 strike yields 6.75% if the stock is called away. The implied volatility of both options is around 26%, compared to the stock's trailing twelve-month volatility of 23%.

Analysis

The analysis of AstraZeneca (AZN) options, with the stock currently trading at $74.38 per share, highlights two potential yield-enhancing strategies. Selling the $70.00 strike put contract, which is approximately 6% out-of-the-money, offers a premium of $2.64. This strategy could lead to acquiring shares at an effective cost basis of $67.36 if the put is assigned, an attractive discount to the current market price. There is a 69% statistical probability of this put expiring worthless, which would translate to a 3.77% return on the cash commitment, or a 7.40% annualized YieldBoost. For investors already holding AZN shares, selling a covered call at the $75.00 strike, approximately 1% out-of-the-money, with a current bid of $4.40, could yield a total return of 6.75% if the stock is called away by the December 19th expiration, excluding dividends. If this call option expires worthless, an event with a 45% probability, the investor retains both their shares and the premium, achieving a 5.92% boost to returns, or 11.61% annualized. Notably, the implied volatility for both the put and call examples is approximately 26%, which is slightly above AstraZeneca's trailing twelve-month actual volatility of 23%, suggesting options may be priced with a modest premium.

Key Decisions for Investors

• Investors seeking to acquire AstraZeneca shares at a potentially lower net cost than the current market price could consider selling cash-secured puts at the $70.00 strike, aiming for assignment or collecting the premium if the option expires worthless.
• Existing AstraZeneca shareholders looking to generate additional income from their holdings might evaluate writing covered calls at the $75.00 strike, being mindful that this strategy caps potential upside appreciation if the stock price significantly exceeds the strike price by expiration.
• Given that the options' implied volatility of approximately 26% is slightly higher than the stock's 23% historical volatility, option selling strategies may offer a marginal edge, but investors should monitor this relationship as market conditions evolve.