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Analyze MP Materials Corp’s Options Strategy: Balancing Risk and Reward

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Analyze MP Materials Corp’s Options Strategy: Balancing Risk and Reward

Exploring Alternative Investment Strategies with MP Materials Corp

Investors pondering over acquiring MP Materials Corp (Symbol: MP) shares, yet hesitant about the current market value of $15.02/share, have the opportunity to explore selling puts among the array of alternative strategies within reach.

Assessing the January 2026 Put Option

One intriguing put contract to consider is the January 2026 put at the $5 strike, currently boasting a bid of 45 cents. Electing to collect this bid as the premium could yield a handsome 9% return against the $5 commitment, translating to a 5% annualized rate of return, a strategy we at Stock Options Channel fondly refer to as the YieldBoost.

Embarking on a put-selling journey doesn’t bestow investors with the privilege of relishing MP’s potential upside as owning shares would. The put seller finds themselves possessing shares only in the event of contract exercise. Moreover, the counterparty would only find value in exercising at the $5 strike if it proves more profitable than selling at the prevalent market price. Unless MP Materials Corp observes a steep 66.7% decline in its shares, culminating in contract exercise (yielding a cost basis of $4.55 per share post-deducting the 45 cents from $5), the sole benefit for the put seller lies in seizing the premium, securing a 5% annualized rate of return.

Evaluating Historical Data and Volatility

Relying on the chart depicting the trailing twelve-month trading history of MP Materials Corp, users can effortlessly discern the position of the $5 strike concerning this historical data. Paired with fundamental analysis, this chart, along with the stock’s historical volatility, serves as a valuable compass to gauge whether vending the January 2026 put at the $5 strike for a 5% annualized rate of return stands as an agreeable tradeoff between reward and risk. Our calculations deduce the trailing twelve-month volatility for MP Materials Corp, factoring in the last 250 trading day closing values and the current $15.02 price, to be 49%. To explore additional put options contract suggestions across various available expirations, feel free to browse the MP Stock Options page on StockOptionsChannel.com.

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Additional Resources:
  • HTHT shares outstanding history
  • PNT YTD Return
  • Top Ten Hedge Funds Holding CVIA

The views and opinions articulated above stem from the author and may not necessarily align with those of Nasdaq, Inc.