Investors interested in Applied Optoelectronics Inc (AAOI) have an option to consider selling put contracts as an alternative to purchasing shares at the current market price of $44.09. Notably, a January 2028 put option with a $15 strike is available, offering a bid of $3.50. This would yield a 23.3% return based on the $15 commitment, translating to an 11.8% annualized return if the premium is secured.
The strategy of selling puts comes with the caution that it does not provide exposure to the stock’s upside potential. The seller only acquires shares if the put option is exercised, which would occur only if AAOI’s shares decline by 66.4%, resulting in a cost basis of $11.50 post-commission fees. Furthermore, the historical volatility of AAOI stands at 123% over the trailing twelve months, which should inform risk assessments related to this investment strategy.
