Interesting CAH Put And Call Options For July 11th

Analysis of Cardinal Health (CAH) options reveals potential strategies for investors seeking enhanced yield. Selling the $152.50 put offers a potential 1.51% return (12.80% annualized) if it expires worthless, with a 54% probability based on current data. Conversely, a covered call strategy at the $155.00 strike could yield 2.36% if the stock is called away, while a worthless expiration offers a 1.34% return (11.34% annualized), also with a 54% probability; both options exhibit an implied volatility of approximately 23%.

Analysis

The article details two options strategies for Cardinal Health, Inc. (CAH) focusing on yield enhancement. Selling a put contract at the $152.50 strike price, with a current bid of $2.30, offers an investor the potential to acquire CAH shares at an effective cost basis of $150.20, a discount from the current trading price of $153.43. There is a 54% statistical probability, based on current analytical data, that this out-of-the-money put contract (approximately 1% below the current price) will expire worthless, in which case the collected premium would represent a 1.51% return on the cash commitment, or an annualized YieldBoost of 12.80%. Alternatively, for existing CAH shareholders, selling a covered call at the $155.00 strike price, with a current bid of $2.05, could generate a total return of 2.36% if the stock is called away by the July 11th expiration, assuming purchase at $153.43. This call strike is approximately 1% out-of-the-money, and analytical data suggests a 54% chance of it expiring worthless. If it does, the premium collected would provide a 1.34% boost to returns, equivalent to an 11.34% annualized YieldBoost. Both the put and call options exhibit an implied volatility of approximately 23%, which is slightly above the actual trailing twelve-month historical volatility calculated at 22% (based on the last 250 trading days).

Key Decisions for Investors

• Investors interested in acquiring Cardinal Health shares at a potential discount to the current market price of $153.43 might consider selling the $152.50 put, aiming for an effective entry point of $150.20 or a 12.80% annualized yield if the option expires worthless.
• Existing Cardinal Health shareholders with a neutral to moderately bullish outlook could evaluate selling the $155.00 covered call to generate income, potentially earning an 11.34% annualized yield from the premium if the option expires worthless, or achieving a 2.36% total return if shares are called away, while acknowledging the capped upside beyond $155.00.