Exploring the Benefits of Selling Puts
Investors intrigued by Aurora Innovation Inc (Symbol: AUR) stock but wary of its current price at $2.21/share have the option to leverage alternative strategies, such as selling puts. One notable put contract to consider is the January 2026 put with a $1.50 strike, offering a bid of 35 cents. By collecting this premium, investors could potentially secure a 23.3% return on a $1.50 commitment, translating to a 12.7% annual rate of return.
Understanding the Risks and Rewards
Unlike owning shares, selling a put doesn’t grant investors direct access to AUR’s potential upside. The put seller only acquires shares if the contract is exercised. The counterparties, in turn, will only exercise the $1.50 strike if it yields a superior outcome compared to selling at the prevailing market price. Hence, unless Aurora Innovation Inc undergoes a 32.1% decline and the contract is executed, the put seller’s sole benefit lies in collecting the 12.7% annualized rate of return.
Utilizing Historical Data and Market Analysis
Examining the trailing twelve-month trading history of Aurora Innovation Inc, alongside its historical volatility, can aid in evaluating the profitability of selling the January 2026 put at the $1.50 strike for a 12.7% annualized return. With a calculated 86% trailing twelve-month volatility (based on the last 251 closing values and today’s price of $2.21), investors can gauge the risk-reward ratio before making a decision. For more put options strategies across various expiration dates, investors can refer to the AUR Stock Options page on StockOptionsChannel.com.
In the midst of Friday’s mid-afternoon trading, the S&P 500 components witnessed a total put volume of 829,525 contracts, paired with a call volume of 829,525. This generated a put:call ratio of 0.72 for the day, surpassing the long-term median ratio of 0.65. This increase suggests a higher-than-expected number of put buyers engaged in options trading activities for the day.
Additional Resources
Discover the Top YieldBoost Puts within the S&P 500 »
Also see:
CDx3 Weekly Preferred Stock Newsletter
ARVL shares outstanding history
Funds Holding EWRM
The opinions expressed herein are those of the author and do not necessarily reflect Nasdaq, Inc.’s views.
