Carter's Inc Options Present Attractive Investment Opportunities

A report highlights new options for Carter's Inc with potential benefits for investors. With a $65 put option offering significant returns and a $67.50 call option as a covered call, investors may find appealing opportunities based on current pricing and volatility.

Date: 17-10-2024

AI Rating: 7

The report detailed the new options available for Carter's Inc (CRI), specifically focusing on a put contract at $65.00 and a call contract at $67.50. The attractiveness of these options lies in their substantial premiums and potential returns.

For the put contract at a $65.00 strike price, investors who sell-to-open could collect a premium of $4.50, effectively reducing the cost basis for purchasing shares to $60.50. This represents a discount of approximately 3% from the current stock price of $67.15. Given the odds of the contract expiring worthless are noted at 59%, there is an opportunity for a 6.92% return on cash commitments, which annualizes to 10.27%. This yield suggests a favorable prospect for income-focused investors.

On the call side, the $67.50 strike price allows for a total return of 9.46%, excluding dividends, if the stock is called away at expiration. The odds of this call option expiring worthless are estimated at 45%, meaning investors could retain their shares while enjoying an 8.94% additional yield, translating to an annualized return of 13.26%. This makes the call option an appealing strategy for those willing to limit their upside in exchange for immediate income.

The implied volatilities of the put and call options are 35% and 37%, respectively, while the reported trailing twelve-month volatility stands at 27%. The higher implied volatility in the options indicates increased market expectations for potential price fluctuations, which can impact decision-making regarding option strategies.

Stocks: CRI