Investors considering a purchase of RH (Symbol: RH) stock, currently priced at $133.34 per share, might find an alternative strategy in selling puts. Notably, the December 2028 put option at the $80 strike has a bid of $19.00, indicating a potential 23.8% return relative to the strike price, or an 8.6% annualized rate of return.
The put seller only stands to own shares if the contract is exercised, which requires a 39.6% decline in RH’s stock price. This would result in a cost basis of $61.00 per share after the premium is considered. As of mid-afternoon trading on Monday, put volume among S&P 500 components reached 1.08 million contracts, matching the call volume, yielding a put:call ratio of 0.72, which is higher than the long-term median of 0.65.
