Cenovus Energy's Long-term Options Open New Opportunities

Investors in Cenovus Energy Inc are presented with new January 2027 options that could yield significant returns. A covered call strategy at the $17 strike may enhance investor profits, but carries risks associated with market volatility.

Date: 16-09-2024

AI Rating: 7

The report details new options available for Cenovus Energy Inc (CVE) that may impact stock prices positively. The $17.00 call contract, with a current bid of $1.25, allows for a covered call strategy. Purchasing shares at $16.23 and selling the call would yield a potential total return of 12.45% if exercised.

The possibility that the call contract may expire worthless offers further benefit, allowing investors to retain shares and collect the premium, which would represent a 7.70% boost in returns, or 3.30% annualized. This opportunity for enhanced returns, combined with market volatility risks, makes it a notable strategy for current investors.

Furthermore, understanding the volatility aspect is essential. The report mentions an implied volatility of 34%, compared to an actual trailing twelve-month volatility of 29%. This discrepancy suggests that the market may be anticipating more movement in CVE’s stock prices, which could lead to price fluctuations and thus affect option premiums.

Stocks: CVE