Discover Financial Services Options Trading Strategies Explored

A report highlights new trading options for Discover Financial Services with call and put contracts due on November 8th. Investors can engage with these contracts at attractive levels, with potential gains and analytics provided for consideration.

Date: 26-09-2024

AI Rating: 7

The report provides insights into the trading activity surrounding Discover Financial Services (DFS) options with a focus on potential investment strategies through puts and calls.

The put option at the $135.00 strike price indicates that investors could purchase stocks at an attractive basis of $129.20 if it is sold to open, representing a slight discount of about 1% compared to the current stock price of $136.49. This could be of interest to investors seeking lower entry points for acquiring shares. If this put expires worthless, the investor would earn a premium that yields a 4.30% return on the cash commitment, which is quite appealing.

On the calls side, the $139.00 strike provides further opportunities. If an investor buys the DFS shares at the current price of $136.49 and sells the call, they commit to selling at $139.00, which could yield a return of 6.38% if the stock is called away. However, with a probability of 49% for the call to expire worthless, there's a favorable chance the investor could retain both the stock and the premium, leading to a generous 4.54% additional return.

The implied volatility for both contracts indicates market expectations for price fluctuations, set at approximately 47%, which is notably higher than the trailing twelve-month actual volatility of 33%. This suggests that while the current market sentiment predicts higher future volatility, the actual past performance has shown less variance, potentially signaling over-expectancy for future movements.

Investors contemplating these options may weigh the potential for returns against the inherent risks associated with options trading. Given the compelling YieldBoost opportunities presented, DFS may attract attention from those looking to optimize their investment strategies and capitalize on price movements around the expiration dates.

Stocks: DFS