New Options for Diageo plc Create Investment Opportunities

Options trading for Diageo plc begins with potential for premium returns. Investors eye a put contract at $115 and a call at $120, suggesting strategic opportunities in the current market conditions.

Date: 04-02-2025

AI Rating: 6

Options Trading Opportunities
Diageo plc (Symbol: DEO) has introduced new options for January 2026, offering investors potential avenues for returns via put and call contracts. The put contract at $115.00 presents a noteworthy opportunity as it is priced at $8.60, allowing investors to effectively lower their cost basis of shares to $106.40 if they choose to exercise it. This represents a slight discount of approximately 2% compared to current trading prices. The odds of the put contract expiring worthless stand at 59%, which could translate to a return of 7.48% on the cash commitment (7.89% annualized) if successful.

Covered Call Strategy
On the calls side, a $120.00 strike price contract is being bid at $8.80, offering a total return potential of 10.22% if DEO shares are called away at expiration. While the strike price represents a 3% premium to the current price, the odds of this contract expiring worthless are estimated at 48%. Should it expire worthless, the investor would benefit from both retaining their shares and accruing the premium, resulting in an effective 7.53% additional return (7.94% annualized).

Volatility Metrics
The current implied volatility for the put contract sits at 27%, while the call contract reflects a slightly lower 26%. These levels indicate market expectations of future price movements surrounding DEO’s stock, while the trailing twelve-month actual volatility is calculated at 23%. This analysis presents a mix of strategies that investors can consider to enhance returns and leverage market movements in Diageo plc stock.

Stocks: DEO