Exploring Options: Is Selling Puts on Arcutis Biotherapeutics the Move?
For investors eyeing a stake in Arcutis Biotherapeutics Inc (Symbol: ARQT), currently priced at $14.21 per share, selling put options might offer an appealing alternative for those hesitant to buy at market rates. One notable option is the January 2027 put with a $7.50 strike, currently bidding at $1.60. By selling this put, investors would receive a premium, equating to a 21.3% return based on the $7.50 commitment or an annualized rate of 10.6%, a figure we refer to as YieldBoost at Stock Options Channel.
However, it’s crucial to note that selling a put does not allow the investor to benefit from potential stock price increases as shareholders do. The put seller only becomes the owner of shares if the option gets exercised. An exercise at the $7.50 strike makes sense only if it is more valuable than selling the shares at the current market price. As such, unless Arcutis Biotherapeutics experiences a 47% decline, leading to an exercised contract, the seller’s reward remains the premium, yielding a 10.6% annualized rate of return.
Below is a chart illustrating the last twelve months of trading activity for Arcutis Biotherapeutics Inc, highlighting in green the relevant $7.50 strike level:
Assessing the chart alongside the stock’s historical volatility can help determine if selling the January 2027 put at the $7.50 strike for an annualized return of 10.6% is a suitable risk-reward proposition. The trailing twelve months’ volatility for Arcutis Biotherapeutics, using the last 250 closing values along with today’s price of $14.21, stands at 81%. For further put option alternatives across various expiration dates, check out the ARQT Stock Options page on StockOptionsChannel.com.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
