Phreesia Inc Options Strategy: Selling Puts for Potential Returns

Investors eyeing Phreesia Inc (Symbol: PHR) may find the current market price of $27.75 per share somewhat steep. To explore alternative strategies, selling put options could present a viable opportunity. Notably, the December put contract at the $20 strike has a current bid of $1.45. Collecting this premium offers a 7.2% return against the $20 commitment or a 9.9% annualized rate of return—a concept we refer to as the YieldBoost at Stock Options Channel.

It is essential to note that selling a put does not grant investors the upside potential associated with holding shares. The put seller only acquires shares if the contract is exercised. The counterparty benefits from exercising the $20 strike option only if it is more advantageous than selling at the current market price. Therefore, unless Phreesia Inc’s shares drop by 27.5% and the option is exercised, the put seller’s only profit comes from the premium collected, which translates to a 9.9% annualized return.

For an illustrative perspective, the chart below shows Phreesia Inc’s trailing twelve-month trading history, marking the $20 strike in green:

This chart, coupled with Phreesia’s historical volatility, serves as a valuable resource for assessing whether selling the December $20 put for a 9.9% annualized return justifies the associated risks. We have calculated the trailing twelve-month volatility for Phreesia Inc—factoring in the last 250 trading day closing values and the current price of $27.75—at 54%. For additional put option ideas with varying expirations, please visit the PHR Stock Options page at StockOptionsChannel.com.

During mid-afternoon trading on Wednesday, the put volume among S&P 500 stocks reached 1.07 million contracts, matching the call volume at 1.07 million. This results in a put/call ratio of 0.70, which is notably higher than the long-term median ratio of 0.65. Consequently, we’re observing an increase in put buyers greater than projected when considering the long-term averages.

For further insights into the most discussed call and put options among traders today, visit this page.

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