Lowe's March Options: Strategic Income Approaches for Different Investor Goals

Lowe’s Companies Inc (LOW) recently opened the doors for new options contracts expiring in March, creating fresh opportunities for income-focused investors. The options market is providing two distinct strategies worth examining—one centered on put selling and the other on covered call writing. Each approach offers different risk-reward profiles suited to varying investment objectives and market outlooks.

The Put-Selling Opportunity in the March Contract

For investors contemplating a purchase of LOW shares, the put-selling strategy presents an intriguing alternative to buying at market price. The March expiration features a $275.00 strike put contract currently bidding at $7.15 per share. By selling-to-open this put, an investor takes on an obligation to purchase shares at $275.00, but simultaneously collects the premium upfront. This mechanism effectively reduces the entry cost to $267.85 per share (excluding commissions)—an attractive discount compared to the current trading level of $277.47.

The mathematical advantage becomes clearer when considering probability. The $275.00 strike sits approximately 1% below market price, classifying it as out-of-the-money. Current analytical models suggest there’s roughly a 57% probability this contract expires worthless, meaning the put seller keeps the premium without having to buy shares. Should this scenario unfold, the $7.15 premium generates a 2.60% return on the committed capital, translating to an annualized yield of roughly 22%. This risk-adjusted income metric is what the options community refers to as YieldBoost.

Understanding the volatility environment helps contextualize this opportunity. The implied volatility embedded in this put contract stands at 28%, compared to the actual trailing twelve-month volatility of 25%. This slight elevation suggests some premium available to premium sellers.

The Covered Call Strategy: March Expiration Approach

On the opposite side of the strategy spectrum lies the covered call for income-conscious shareholders. An investor purchasing LOW at the current $277.47 could simultaneously sell-to-open the March $280.00 call contract (currently bidding $8.70). This dual action commits the seller to deliver shares at $280.00 while pocketing the $8.70 premium immediately.

The total return potential becomes 4.05% should LOW trade up to $280.00 and the shares get called away by March expiration—all without considering any dividend distributions. For the premium collector, this creates a predetermined exit at a profit before commissions factor in.

Like the put strategy, this call sits just 1% above current market price, making it out-of-the-money. The probability models suggest a 51% chance this covered call expires worthless, enabling the investor to retain both the shares and the full premium collected. In this outcome, the $8.70 premium boost yields 3.14% on the stock purchase, or approximately 26.62% annualized—another compelling YieldBoost calculation.

The call contract shows 29% implied volatility, marginally higher than the put’s 28%, suggesting option sellers across the chain are capturing meaningful premium in the current environment.

Weighing the March Strategies: Key Considerations

Both March contracts operate in a volatility environment where the market prices in modestly elevated risk compared to historical norms. The put approach suits investors with dry powder ready to deploy, willing to own LOW at a reduced cost basis. The covered call strategy appeals to existing shareholders seeking steady income while potentially capping upside in exchange for premium certainty.

The put strategy’s 57% probability of expiration paired with 22% annualized yield makes it attractive for patient capital. Conversely, the covered call’s 51% odds and 26.62% annualized yield benefit investors already committed to the stock who prefer incremental gains over home runs.

Tracking how these probabilities evolve through the March expiration window provides valuable insights into shifting market sentiment and volatility trends. For those seeking multiple put and call opportunities across the broader market, specialized options platforms aggregate comparable contract ideas based on similar yield metrics and risk parameters. The key remains matching strategy selection to individual market outlook and portfolio objectives.