Kimbell Royalty Partners LP Offers Attractive Put Options

Investors in Kimbell Royalty Partners LP are eyeing new options with potential for profit. The $15 put contract is particularly appealing, allowing investors to purchase shares at a lower effective price. KRP's current trading price provides a slight discount opportunity.

Date: 24-01-2025

AI Rating: 6

Overview of Kimbell Royalty Partners LP Options

The report highlights new options trading for Kimbell Royalty Partners LP (KRP), specifically focusing on a put contract with a $15.00 strike price. The current price of KRP shares is $15.90, which means the put contract represents a 6% discount to the current market price.

By selling this put option, an investor commits to buying KRP shares at $15.00 but benefits from a premium that effectively reduces their purchase cost to $14.85. This selling strategy could be appealing to investors looking to acquire shares at a reduced price compared to the current market value.

The report mentions that there is a 75% chance the put option will expire worthless, meaning the premium could translate to a 1.00% return on the cash commitment for investors.

Volatility and Investment Consideration

The implied volatility for the mentioned put contract is recorded at 21%, which is slightly higher than the trailing twelve-month volatility of 19%. This discrepancy indicates that the market expects more movement in KRP's stock price than what has been observed historically, suggesting investors might need to prepare for increased fluctuations.

Given the current market conditions and the possibility of obtaining shares at a discount, investors might perceive KRP as a more attractive investment opportunity. However, those interested should consider the option's expiration potential and the alignment with their investment strategy.

Stocks: KRP