Consider Selling Puts on Axos Financial Inc for Potential Gains

Investors eyeing Axos Financial Inc (Symbol: AX) may find the current market price of $55.95 per share a bit steep. One strategy worth exploring is selling put options. The January 2027 put at the $40 strike stands out, currently having a bid of $4.90. This premium offers a solid 12.2% return based on the $40 commitment, which translates to a 6.9% annualized return—a strategy we refer to as the YieldBoost at Stock Options Channel.

While selling a put does not grant the investor potential upside in AX shares like owning the stock does, it can still be a strategic move. The put seller only acquires shares if the option is exercised, meaning the counterparty benefits by exercising the option only if it proves more advantageous than selling at the current market price. If Axos Financial shares were to decline by 29.1%, causing the option to be exercised, the investor’s effective cost basis would drop to $35.10 per share (after subtracting the premium from the strike price of $40). Hence, for those selling the put, the sole benefit lies in collecting the premium, yielding a 6.9% annualized return unless prices drop significantly.

Below is a chart illustrating the trailing twelve-month trading history for Axos Financial Inc, clearly indicating where the $40 strike lies in relation to this history:

This chart, combined with the historical volatility of the stock, can provide insights when assessing whether selling the January 2027 put option at the $40 strike for a 6.9% annualized return is a favorable risk-reward scenario. We’ve calculated the trailing twelve-month volatility for Axos Financial Inc to be 42%, factoring in the last 253 trading days and the current price of $55.95. For additional put option ideas with various expirations, visit the AX Stock Options page on StockOptionsChannel.com.

During mid-afternoon trading on Friday, the put volume among S&P 500 components reached 1.12M contracts, matching the call volume at 1.12M contracts. This resulted in a put:call ratio of 0.74, above the long-term median of 0.65. This indicates a higher-than-expected number of put buyers observing today’s options trading.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.