Nuvalent Inc (NUVL) Offers Attractive Put Options for Investors

Investors eyeing Nuvalent Inc (Symbol: NUVL) shares, currently priced at $69.91 each, may find selling put options a prudent alternative to outright purchases. One notable opportunity is the December put contract with a $55 strike price, which is currently bid at $4.70. By selling this put, an investor can secure an 8.6% return against the $55 commitment, translating to an 11.9% annualized rate of return, a strategy we refer to as the YieldBoost at the Stock Options Channel.

Understanding the Trade-Offs of Selling a Put

While selling a put option can generate income, it does not provide the same benefits as owning shares of NUVL. The put seller will only acquire shares if the option is exercised, which occurs when the market price falls below the strike price of $55. If this happens, the seller will end up with shares at a cost basis of $50.30 apiece (calculated by deducting the $4.70 premium from the $55 strike price) after accounting for broker commissions. Conversely, if Nuvalent Inc’s share price does not decrease by 21.3% to trigger exercise of the contract, the seller gains only from the premium collected, reaping the 11.9% annualized return.

Chart Analysis of Nuvalent Inc’s Trading History

The chart below illustrates the trailing twelve months of trading history for Nuvalent Inc, highlighting the position of the $55 strike price within that timeframe:

This chart, along with the historical volatility of Nuvalent, is instrumental in evaluating whether the December put option at the $55 strike presents an attractive risk-reward scenario. Our analysis shows Nuvalent Inc’s trailing twelve-month volatility to be 49%, based on the last 251 trading days and the current share price of $69.91. For more put option contract ideas across various expirations, visit the NUVL Stock Options page on StockOptionsChannel.com.

Current Market Sentiment and Options Trading Activity

During mid-afternoon trading on Wednesday, the volume of put options among S&P 500 constituents reached 837,454 contracts, while call options also matched this number, resulting in a put-call ratio of 0.75. This figure is above the long-term median ratio of 0.65, indicating a higher-than-expected level of put buying in the options market today.

To explore the 15 most discussed call and put options among traders, visit this link.

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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.