British American Tobacco BTI Options Analysis: $50 Put Contract Shows Significant Appeal
- Put Contract Appeal: The current bid for the $50.00 put contract is $2.00, and if an investor sells to open this contract, they commit to buying BTI shares at $50.00, effectively lowering their cost basis to $48.00, which represents a 12% discount from the current price of $56.91, making it attractive for potential buyers.
- Expiration Risk Assessment: Current analytics suggest a 68% chance that the put contract will expire worthless, and if it does, the premium would yield a 4.00% return on cash commitment, or 2.59% annualized, providing an additional income opportunity for investors.
- Call Contract Potential: The $60.00 call contract has a current bid of $2.00, and if an investor buys BTI shares at $56.91 and sells this contract, they could achieve an 8.94% total return if the stock is called away at the July 2027 expiration, although this may leave upside potential untapped.
- Risk and Return Analysis: The $60.00 call contract has a 55% chance of expiring worthless, allowing investors to retain both their shares and the premium collected, resulting in an additional 3.51% return, or 2.27% annualized, offering flexible investment strategy options.
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