Reaping Profits with Strategic Options Trading
Potential investors eyeing a stake in Pacira BioSciences Inc (Symbol: PCRX) may find themselves hesitating due to the current market price of $29.22 per share. However, there is a clever alternative strategy worth considering – selling puts. One particularly intriguing put contract is the June put at the $15 strike, with a bid of 40 cents at the present moment. By collecting this bid as premium, investors can secure a 2.7% return against the $15 commitment. This translates to an impressive 12.5% annualized rate of return. At Stock Options Channel, we affectionately refer to this as the YieldBoost.
The Nitty-Gritty of Put Selling
While selling a put does not provide the same access to PCRX’s upward potential as owning shares does, it does offer a unique proposition. The put seller only assumes ownership if the contract is exercised. It’s essential to note that exercising the contract at the $15 strike price would only be advantageous if the outcome surpasses selling at the prevailing market rate. Therefore, unless Pacira BioSciences Inc experiences a 48.6% drop leading to contract exercise (resulting in a cost basis of $14.60 per share after deducting the 40 cents from $15), the sole upside for the put seller lies in collecting the premium for the remarkable 12.5% annualized rate of return.
Assessing Viability: Volatility and Historical Data
To gauge the viability of selling the June put at the $15 strike for the 12.5% annualized return in light of the accompanying risks, it’s prudent to consult the chart displaying the trailing twelve month trading history for Pacira BioSciences Inc. This, in conjunction with the stock’s historical volatility and fundamental analysis, offers a well-rounded perspective. The trailing twelve month volatility for Pacira BioSciences Inc, considering the last 250 trading day closing values and the current price of $29.22, stands at 35%. For additional put options contract suggestions across different available expirations, explore the PCRX Stock Options page on StockOptionsChannel.com.
Market Insights: Unraveling Trading Trends
In the afternoon trading session on Thursday, put volume among S&P 500 components totaled 4.23M contracts, while call volume hit 5.36M. This resulted in a put:call ratio of 0.79 for the day – significantly higher than the long-term median put:call ratio of 0.65. The elevated put:call ratio indicates an increased presence of put buyers in the options market today, compared to the usual dominance of call buyers.
Curious about the call and put options making waves in the trading sphere? Stay informed on the latest trends that traders are buzzing about today.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.