RTX Options Trading Sparks Investor Interest Ahead of Expiration

Investors are eyeing new RTX Corp options contracts set to expire in May 2025. These provide significant opportunities with attractive premiums, which could influence stock positions and pricing strategies as the expiration date approaches, according to the report.

Date: 19-09-2024

AI Rating: 7

The report discusses the introduction of new options for RTX Corp (Symbol: RTX), specifically focusing on put and call contracts set to expire in May 2025. For potential investors, these options could significantly influence their trading strategies and stock positions based on the premium and potential returns outlined.

The put contract at a $100.00 strike price has a current bid of $2.06. Selling this put allows an investor to establish a cost basis of $97.94 per share if exercised, which is favorable considering the current share price of $118.48. The strike price represents a considerable discount of approximately 16%, enhancing the attractiveness of the contract for potential buyers.

Additionally, the report highlights an 81% chance that the put contract may expire worthless, adding a layer of appeal for investors looking to capitalize on the premium without the risk of having to purchase the shares. This potential yield also represents a return of 2.06% on the cash commitment, or 3.15% annualized, termed as YieldBoost.

On the call contract side, the report mentions a $125.00 strike price with a current bid of $5.90. If investors choose to execute a covered call by purchasing shares at the current price level of $118.48, they could see a total return of 10.48% at expiration, excluding dividends. This presents an opportunity for capped gains with an attractive premium attached.

As there is a 54% chance that the covered call will expire worthless, investors may retain their shares while profiting from the collected premium, resulting in a 4.98% extra annualized return. The differing implied volatilities for the put (30%) and call (24%) contracts, as well as the calculated trailing volatility of the stock at 19%, hint at varying investor sentiment and risk assessments related to future price movements.

Stocks: RTX