Investors in Discover Financial Services (Symbol: DFS) saw new options begin trading today, for the September 4th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the DFS options chain for the new September 4th contracts and identified one put and one call contract of particular interest.
The put contract at the $49.00 strike price has a current bid of $1.65. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $49.00, but will also collect the premium, putting the cost basis of the shares at $47.35 (before broker commissions). To an investor already interested in purchasing shares of DFS, that could represent an attractive alternative to paying $51.13/share today.
Because the $49.00 strike represents an approximate 4% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also