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Investors interested in purchasing Victoria’s Secret & Co (NYSE: VSCO) are considering alternatives to the current market price of $34.77 per share. One option is selling a December 2027 put contract at a $20 strike, which is currently bid at $3.70. This strategy could yield an 8.9% annualized return, with an 18.5% return against the $20 commitment.
If the stock price falls 41.8% and the put contract is exercised, the cost basis would drop to $16.30 per share, accounting for the premium. The stock’s historical volatility, measured at 68% over the last twelve months, plays a significant role in evaluating this strategy against potential risks.
During mid-afternoon trading on Friday, the put volume for S&P 500 components reached 1.43 million contracts, matching the call volume and resulting in a put-call ratio of 0.72, which exceeds the long-term median of 0.65, indicating heightened put buying activity in the market.
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