VIAC/Batman - That's what I was saying - at this price, they are going to get bought.
At $33.08, VIAC's 0.96 dividend is 3.2%, that's not bad. Still, it's only collecting $2 over 2 years and you can sell the 2024 $30 puts for $5 to net in for $25, which would make the dividend 3.8% so let's consider that $5 to be totally free money, as the worst case would be owning 500 shares for $15,000. In that case, a spread would be:
- Sell 5 VIAC 2024 $30 puts for $5 ($2,500)
- Buy 10 VIAC 2024 $25 calls for $11.60 ($11,600)
- Sell 10 VIAC 2024 $30 calls for $8.80 ($8,800)
That's net $300 on the $5,000 spread so, rather than spending $16,500 on 500 shares of VIAC at $33, you obligate yourself to buy 500 shares at $15,300 and at $30, you make $4,700 as opposed to losing $1,500 and collecting $1,000 in dividends. Of course, the real competition would be a stock spread like:
- Buy 500 VIAC at $33 ($16,500)
- Sell 5 VIAC 2024 $30 calls for $8.80 ($4,400)
- Sell 5 VIAC 2024 $30 puts for $5 ($2,500)
So here you have net $9,600 invested and you'll collect $1,000 in dividends and, if called away at $30 ($15,000), you will make $5,400 more. So the stock trade is better if you don't mind obligating yourself to DD at $30, which would put you in (less dividends) 1,000 shares at $24,600, which is $8,400 (25%) below the current price - as your worst case.
So both are good ways to play, more a matter of preference. For me, in a PM account, I'd rather commit to 2x the options without using the cash.
BofA's top 10 Q1 ideas gather precision picks for a volatile quarter
ViacomCBS Inc. (VIAC) Presents at UBS 2021 Global TMT Virtual Conference (Transcript)
ViacomCBS: Buy The Streaming, Get The Legacy Business As A Gift
Top Trades for Wed, 01 Dec 2021 12:52 – VIAC, INTC, MO, WBA and IBM (again)
Top Trades for Wed, 13 Oct 2021 09:16 – BYD, GOLD, HPQ, PFE, SPWR & VIAC
Top Trades for Mon, 29 Mar 2021 10:27 – DISCA and VIAC
So that's 2 years of picking VIAC.
