Investors considering Ulta Beauty Inc (Symbol: ULTA) at its market price of $493.28/share may explore selling put options as a strategy. A notable option is the January 2027 put at the $380 strike, with a current bid of $24.10, yielding a 6.3% return on the $380 commitment and a 4.2% annualized rate of return.
The sale of the put does not allow investors to benefit from Ulta’s share upside unless the stock falls 22.8% and the contract is exercised, resulting in an effective cost basis of $355.90 per share before fees. Current volatility for Ulta is estimated at 39% over the past year. On Friday, S&P 500 put volume reached 2.83 million contracts compared to 3.14 million calls, yielding a put:call ratio of 0.90, notably above the long-term median of 0.65.
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