Investors Consider Selling Puts on Blackstone Mortgage Trust

For those interested in Blackstone Mortgage Trust Inc (Symbol: BXMT) but hesitant to invest at the current market price of $16.74 per share, exploring the option of selling puts could be a viable strategy. One noteworthy opportunity is the January 2027 put option with an $8 strike price, offering a bid of 60 cents as of this writing. Collecting this premium translates to a 7.5% return based on the $8 commitment, equating to an annualized rate of return of 4.2%, which we refer to as the YieldBoost.

It is important to understand that selling a put does not grant exposure to BXMT’s potential upside in the same way owning shares does. As a put seller, the investor will only acquire shares if the contract is exercised. The counterparty may choose to exercise the contract only if it proves more advantageous than selling at the current market price. Unless Blackstone Mortgage Trust Inc’s shares decline by 52.8%, leading to the exercise of the contract (resulting in an effective cost basis of $7.40 per share after accounting for the 60-cent premium), the primary benefit for the put seller lies in receiving the premium, providing a 4.2% annualized return.

Below is a chart depicting the trailing twelve-month trading history for Blackstone Mortgage Trust Inc, highlighting the position of the $8 strike price relative to that history:

This chart, combined with BXMT’s historical volatility, serves as a useful reference alongside fundamental analysis to assess whether selling the January 2027 put at the $8 strike for a 4.2% annualized return is a favorable risk-reward scenario. The trailing twelve-month volatility for Blackstone Mortgage Trust Inc, calculated using the last 251 closing values and the current price of $16.74, stands at 29%. For additional put option contract ideas with various expiry dates, visit the BXMT Stock Options page at StockOptionsChannel.com.

As of mid-afternoon trading on Friday, the put volume for S&P 500 components was 1.12 million contracts, matched by a call volume of 1.12 million, yielding a put-to-call ratio of 0.74. This is above the long-term median put-to-call ratio of 0.65, indicating a higher-than-expected number of put buyers in 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.