Exploring Options: Selling Puts for Permian Resources Corp

Investors eyeing Permian Resources Corp (Symbol: PR) shares at the current market price of $11.90 might find selling put options a useful strategy. A notable example is the March 2026 put contract with an $8 strike price, currently bidding at 50 cents. By selling this put, investors can earn a premium that translates to a 6.2% return on the $8 commitment, or a 7% annualized rate of return.

It’s important to note that selling a put does not provide the same upside potential as owning shares. The put seller only acquires shares if the contract is exercised. In this scenario, exercising the option at the $8 strike makes sense only if it outweighs selling shares at the current market price. For the option to be exercised, Permian Resources Corp’s shares would need to decline by 32.2%, resulting in an effective cost basis of $7.50 per share after accounting for the premium.

Interestingly, this 7% annualized return surpasses the 5% dividend yield currently offered by Permian Resources Corp,; however, there is a downside to directly purchasing shares for dividend collection. Investors would face a significant risk as the shares must drop to the $8 strike price, a 32.2% decrease.

Dividends can vary based on a company’s profitability, making them less predictable. Investors evaluating Permian Resources Corp should consult the company’s dividend history to determine the likelihood of sustaining the current 5% yield.

The chart below illustrates the trailing twelve-month trading history for Permian Resources Corp, highlighting where the $8 strike price falls within this context:

Combining the above chart with the company’s historical volatility can help investors assess whether selling the March 2026 put for a 7% annualized return is a sound decision. The trailing twelve-month volatility for Permian Resources Corp is currently calculated at 43%, based on the last 250 trading days and today’s price of $11.90.

On Wednesday afternoon, put volume for S&P 500 components reached 1.30 million contracts, while call volume stood at 1.53 million, leading to a put:call ratio of 0.85. This suggests an unusually high level of put activity compared to the long-term median of 0.65, indicating a notable interest among put buyers in the current market.

Top YieldBoost Puts of the S&P 500 »

Additional Resources:

• Cheap Materials Shares
• JRC Historical Stock Prices
• AMPH Shares Outstanding History

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