New WBD Options Trading at Discount Could Attract Investors

A report highlights new options trading for Warner Bros Discovery Inc, offering an attractive alternative investment opportunity. The put contract at the $9.00 strike price represents a significant discount, which could appeal to potential buyers amid current market conditions.

Date: 27-11-2024

AI Rating: 7

The report discusses new options trading for Warner Bros Discovery Inc (WBD), particularly focusing on a put contract at the $9.00 strike price. This contract offers investors a chance to purchase shares at a discount compared to the current market price of $10.30.

Specifically, selling to open this put contract entails commitment to buy the shares at $9.00, effectively lowering the cost basis to $8.92 after accounting for the premium. Given that this strike price is approximately 13% below the current share price, potential buyers may find this an attractive opportunity, particularly in light of favorable odds of 73% that the put contract could expire worthless.

The YieldBoost from this strategy indicates a possible return of 0.89% on the cash commitment, equating to an annualized return of 7.37%. This scenario could provide a layer of income for investors who are already contemplating purchasing WBD shares.

Additionally, the implied volatility of the put contract stands at 50%, while the actual trailing twelve-month volatility is calculated at 48%. Such a close margin may suggest that the market has relatively stable expectations regarding the stock's performance, but the high implied volatility could also indicate a degree of uncertainty in price movements.

Stocks: WBD