Interesting AXS Put And Call Options For August 15th

Analysis of AXIS Capital Holdings (AXS) options reveals potential strategies for investors. Selling the $95 put offers a cost basis of $94.50 with a 74% chance of expiring worthless, yielding a 3.31% annualized return. A covered call strategy involving purchasing AXS at $102.28 and selling the $105 call offers a 4.08% return if the stock is called away, with a 55% chance of the contract expiring worthless and an 8.92% annualized yield; implied volatility for the put and call are 34% and 28% respectively, while actual trailing twelve month volatility is 25%.

Analysis

AXIS Capital Holdings Ltd (AXS), currently trading at $102.28 per share, presents several options-based strategies for investors. Selling a cash-secured put at the $95.00 strike price, with a bid of 50 cents, offers a potential entry point at an effective cost basis of $94.50, representing an approximate 7% discount to the current market price. Analytical data suggests a 74% probability of this out-of-the-money put expiring worthless, which would yield a 0.53% return on the cash commitment, or 3.31% annualized. Alternatively, a covered call strategy involving purchasing AXS shares at $102.28 and selling the $105.00 strike call contract (bid $1.45) could generate a total return of 4.08% if the stock is called away by the August 15th expiration. There is a 55% assessed probability of this call expiring worthless, in which case the collected premium would provide a 1.42% return enhancement, or an 8.92% annualized YieldBoost. Notably, the implied volatility for the put option is 34% and for the call option is 28%, both of which are higher than the actual trailing twelve-month historical volatility of 25%. This discrepancy suggests that option premiums may be relatively elevated compared to recent realized price movements.

Key Decisions for Investors

• Investors interested in acquiring AXS at a discount to the current price of $102.28 could consider selling the $95.00 strike put, thereby achieving a cost basis of $94.50 if assigned, or earning a 3.31% annualized yield if the option expires worthless.
• For existing AXS shareholders or those acquiring shares at current levels, selling the $105.00 strike covered call offers potential income generation, yielding an 8.92% annualized return if the option expires worthless, or a 4.08% total return if the stock is called away, albeit capping upside potential above $105.00.
• Investors should note that the current implied volatilities (34% for puts, 28% for calls) exceed the 25% historical volatility, potentially making option selling strategies more attractive due to richer premiums, but also reflecting higher market-perceived uncertainty for AXS.