Exploring Put Options for Innovative Industrial Properties Shares

Investors interested in acquiring shares of Innovative Industrial Properties Inc (Symbol: IIPR) may want to explore alternative strategies, particularly selling put options, if they hesitate to pay the current market price of $47.02 per share. One notable contract to consider is the October put option with a $35 strike price, which has a bid of $2.70 at the time of this writing. Selling this put could yield a premium return of 7.7% on the $35 commitment, translating to an impressive annualized return of 14.7%, a strategy referred to as YieldBoost by Stock Options Channel.

Understanding the Implications of Selling Puts

It’s vital to note that selling a put does not enable investors to participate in IIPR’s potential upside as owning the shares would. A put seller will only own shares if the contract is exercised. For the buyer of the put option to exercise their right at the $35 strike price, the market price would need to be lower than what they could receive by selling at market. Unless Innovative Industrial Properties Inc experiences a decline of 25.3%, leading to the exercise of the contract, the put seller’s potential gain is limited to the premium, which promises the aforementioned 14.7% annualized return.

Below is a chart that displays the trailing twelve-month trading history for Innovative Industrial Properties Inc, marking in green the position of the $35 strike relative to this history:

This chart, along with the stock’s historical volatility, can inform decisions by helping to evaluate whether selling the October put at the $35 strike for a 14.7% annualized return offers sufficient reward for the associated risks. According to data considering the last 251 trading day closing values and the current price of $47.02, Innovative Industrial Properties Inc has a trailing twelve-month volatility of 46%. For additional put option suggestions across various expiration dates, visit the IIPR Stock Options page on StockOptionsChannel.com.

Current Market Activity in Options Trading

During mid-afternoon trading on Wednesday, the put volume among S&P 500 components reached 1.09 million contracts, while call volume stood at 1.39 million contracts, resulting in a put-call ratio of 0.78 for the day. This ratio is considerably higher compared to the long-term median of 0.65, indicating that there are significantly more put buyers participating in the market than typical.

For a closer look at the options trades capturing attention today, you can find which 15 call and put options traders are actively discussing.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.