First week of November 19 Options trading for Vanguard Scottsdale funds – Vanguard Long-Term Treasury Index ETF (VGLT)


IInvestors in Vanguard Scottsdale Funds – The Vanguard Long-Term Treasury Index ETF (ticker: VGLT) saw new options start trading this week, expiring on November 19. One of the main data going into the price that an options buyer is willing to pay is the time value. So, with 245 days to expiration, new trading contracts represent a possible opportunity for put or call options sellers to earn a higher premium than they would. be available for contracts with an earlier expiration. At Stock Options Channel, our YieldBoost formula scoured the VGLT options chain for new November 19 contracts and identified a sell contract and a buy contract of particular interest.

The contract to sell at the strike price of $ 79.00 has a current bid of $ 3.60. If an investor were to sell to open this sales contract, they agree to buy the stock at $ 79.00, but will also collect the premium, putting the base price of the shares at $ 75.40 (before broker commissions ). For an investor already interested in buying shares of VGLT, this could represent an attractive alternative to paying $ 82.09 / share today.

Since the strike price of $ 79.00 represents a discount of around 4% from the current share price (in other words, it is out of the money by that percentage), it is also possible that the sales contract expires worthless. Current analytical data (including Greeks and Greeks implied) suggests that the current chance of this happening is 62%. The Stock Options Channel will monitor these quotes over time to see how they evolve, posting a chart of these numbers on our website under the contract detail page for that contract. If the contract expires worthless, the premium would represent a return of 4.56% on the cash commitment, or 6.79% annualized – at Stock Options Channel, we call that the YieldBoost.

Below is a chart showing the past twelve months trading history for Vanguard Scottsdale Funds – Vanguard Long-Term Treasury Index ETF, and highlighting in green where the exercise of $ 79.00 is compared to this history:

With respect to the options chain call options, the strike price call contract of $ 83.00 has a current bid of $ 3.70. If an investor were to buy shares of VGLT at the current price level of $ 82.09 / share and then sell to open that purchase contract as a “covered call”, they agree to sell the share at 83. , $ 00. Since the call seller will also receive the premium, this would generate a total return (excluding dividends, if any) of 5.62% if the stock is recalled on the November 19 expiration (before broker commissions. ). Of course, a lot of benefits could be left on the table if VGLT stocks really skyrocket, which is why looking at the past twelve month trading history for Vanguard Scottsdale Funds – Vanguard Long-Term Treasury Index ETFs, along with the study of business fundamentals become important. Below is a chart showing VGLT’s last twelve months trading history, with the strike price of $ 83.00 highlighted in red:

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Since the strike price of $ 83.00 represents a premium of around 1% over the current share price (in other words, it is out of the money by that percentage), it is It is also possible that the covered purchase contract will expire worthless, in which case the investor would keep both his shares and the premium received. Current analytical data (including Greeks and Greeks implied) suggests that the current chance of this happening is 54%. On our website, under the contract detail page for that contract, the Stock Options Channel will track these quotes over time to see how they change and publish a chart of those numbers (the option contract’s trading history will be also plotted). If the covered purchase contract expires worthless, the premium would represent a 4.51% increase in additional return to the investor, or 6.71% on an annualized basis, which we call the YieldBoost.

The implied volatility in the sales contract example is 20%, while the implied volatility in the sales contract example is 16%.

Meanwhile, we calculate the actual volatility of the past twelve months (taking into account the closing values ​​of the last 252 trading days as well as today’s price of $ 82.09) at 14%. For more put and call option contract ideas worth considering, visit StockOptionsChannel.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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