Investors Explore Put Selling Strategy for Photronics, Inc.

Investors interested in Photronics, Inc. (Symbol: PLAB) may be contemplating a purchase given the current market price of $17.65 per share. However, to mitigate costs, they might consider selling put options as an alternative strategy. A notable example is the December put option at the $15 strike, which has a bid of $1.30. By collecting this premium, investors could secure an 8.7% return based on the $15 obligation, equating to a 12.9% annualized rate of return—referred to as the YieldBoost.

It is important to note that selling a put option does not provide the same potential for capital appreciation as owning shares directly. Instead, the put seller only obtains shares if the option is exercised. This means that the holder would benefit from exercising the option only if it yields a more favorable outcome than selling at the market price. Unless the stock price of Photronics, Inc. drops 15% and the option is exercised—resulting in an effective cost basis of $13.70 per share— the primary advantage for the put seller lies in collecting the premium, thus achieving a 12.9% annualized return.

The chart below displays the trailing twelve-month trading history for Photronics, Inc. It highlights the positioning of the $15 strike relative to this history:

Analysis of the aforementioned chart in conjunction with the stock’s historical volatility can aid investors in determining whether selling the December put at the $15 strike aligns well with the potential reward versus the associated risks. The current trailing twelve-month volatility for Photronics, Inc., calculated using the last 251 trading days along with today’s share price of $17.65, stands at 44%. For additional put option ideas covering various expirations, check the PLAB Stock Options page on StockOptionsChannel.com.

In recent trading on Thursday, put volume for S&P 500 components reached 1.15 million contracts, while call volume was at 1.39 million. This results in a put:call ratio of 0.82 for the day, which is notably higher than the long-term median put:call ratio of 0.65. This indicates a comparatively higher number of put buyers in today’s options trading than is typically observed.

Top YieldBoost Puts of the S&P 500 »

also see:

• PUCKU Historical Stock Prices
• ETE Split History
• OSBC YTD Return

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.