Bank of America Corp (BAC) investors considering shares priced at $48.28/share can explore alternative strategies such as selling puts. A notable option is the December 2027 put at the $28 strike, currently bid at $1.21, offering a 4.3% return on the $28 commitment, translating to a 1.9% annualized rate of return.
For the put seller, ownership of BAC shares occurs only if the put is exercised, which requires a 41.8% decline in share price to $28. Otherwise, the investor’s only benefit is the premium collected.
On Wednesday, put volume among S&P 500 components reached 1.52 million contracts, matching call volume for a put:call ratio of 0.72, exceeding the long-term median ratio of 0.65, indicating higher than expected put buying activity.
