Investors Consider Selling Puts on GE Vernova Inc for Strategy

When considering a purchase of GE Vernova Inc (Symbol: GEV) at its current market price of $297.25 per share, some investors may find themselves hesitant. An alternative strategy worth exploring is the sale of put options. One notable option available is the January 2027 put contract with a strike price of $155, currently offering a bid of $14.10. By selling this option, investors can collect a premium that yields a 9.1% return based on the $155 commitment, translating to an annualized rate of return of 4.9%, a figure we refer to as YieldBoost at Stock Options Channel.

It is important to understand that selling a put option does not provide the same upside potential as owning shares of GEV. A put seller will only acquire shares if the option is exercised, which occurs only if it becomes more advantageous than selling at the current market price. If GE Vernova Inc’s stock were to drop 48.1%, the option may be exercised, leaving the seller with a cost basis of $140.90 per share after factoring in the $14.10 premium. Thus, without such a decline, the only reward for the put seller is the collected premium resulting in that 4.9% annualized return.

Interestingly, this 4.9% annualized return surpasses GE Vernova Inc’s current dividend yield of 0.1% by 4.8%. If an investor were to purchase the stock solely for the dividend, they would face more significant downside risk, as the stock would need to decrease by 48.08% to hit the $155 strike price.

When discussing dividends, it is crucial to recognize that they can be unpredictable and often fluctuate alongside a company’s profitability. Evaluating the dividend history for GE Vernova Inc can assist investors in determining the likelihood of continued dividend payments, thereby providing context for the 0.1% annualized yield expectation.

The chart provided illustrates GE Vernova Inc’s trailing twelve months trading history, with the $155 strike price highlighted in green for reference to its historical performance.

By combining the above chart with an analysis of GE Vernova Inc’s historical volatility, investors can better assess whether selling the January 2027 put at the $155 strike price offers adequate reward for the associated risks. The trailing twelve-month volatility for GE Vernova Inc is currently calculated at 55%, based on the last 240 trading days of closing values, along with today’s stock price of $297.25. For additional put option ideas and various expiration dates, visit the GEV Stock Options page on StockOptionsChannel.com.

As of mid-afternoon trading on Thursday, the put volume among S&P 500 components reached 1.17 million contracts, while call volume stood at 1.52 million, indicating a put:call ratio of 0.77. This figure is notably elevated compared to the long-term median put:call ratio of 0.65, reflecting a stronger presence of put buyers in today’s options trading than typically seen.
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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.