Investors considering Lucid Group Inc. (Symbol: LCID) stock at a current price of $6.61 per share may explore selling puts as an alternative strategy. A notable option is the December 2027 put at the $3 strike, with a bid of $1.13. This equates to a potential return of 37.7% on the $3 commitment, translating to an annualized rate of 27.1%.
The strategy involves risks, as selling puts limits exposure to share price gains. The put seller only acquires shares if the stock drops to $3 or below, which would represent a decline of 54.7% from current levels. In this case, the effective cost per share would be approximately $1.87, accounting for the premium received.
On Tuesday afternoon trading, put volume among S&P 500 components reached 2.42 million contracts, equal to call volume, resulting in a put:call ratio of 0.72, above the long-term median of 0.65. This indicates increased bearish sentiment in the options market.
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