New Paychex Options Trading: Premiums and Potential Returns

New Paychex options attract investor interest. With potential for attractive premiums between put and call contracts, strategic options trading may enhance returns.

Date: 31-12-2024

AI Rating: 6

Options Trading Overview
Paychex Inc (Symbol: PAYX) has newly introduced options for April 2025. This development presents opportunities for both call and put options. The put contract at the $140.00 strike price shows a current bid of $2.95, while the call contract at the $145.00 strike price has a current bid of $2.00.

Put Option Analysis
Selling to open the put option at a strike price of $140.00, investors are subjecting themselves to a potential purchase of the stock at that price. The effective cost basis would be $137.05 should they receive the premium. This strike price represents a 1% discount from the current trading price of $140.90, with a 56% chance of expiring worthless, thus yielding a 2.11% return on cash commitment or 7.19% annualized if the option expires worthless.

Call Option Analysis
For the call contract at $145.00, purchasing the stock at $140.90, the total return stands at 4.33% if the stock is called away at expiration. The likelihood of the contract expiring without being exercised stands at 58%. This could provide a 1.42% extra return on investment or 4.84% annualized if it does expire worthless.

Implied and Actual Volatility
The report notes that the implied volatility for both options is around 19%, while the actual trailing twelve-month volatility is calculated at 18%. This is a marginally lower volatility compared to the implied figure, indicating that the market may have higher expectations for future volatility compared to historical actuals.

Overall, these trading opportunities reflect a potentially favorable environment for investors considering strategic options trading with Paychex.

Stocks: PAYX