Investors interested in buying shares of Funko Inc (FNKO), currently priced at $3.65, may consider selling put options as an alternative strategy. Specifically, the November put option with a $2.50 strike price has a bid of 50 cents, yielding a potential return of 20% on the $2.50 commitment, equating to an annualized rate of 32.4%.
Funko’s stock would need to decline by 31.7% for the put contract to be exercised, resulting in a cost basis of $2.00 per share, subtracting the 50 cents premium. The company’s trailing twelve-month volatility is calculated at 93%, providing context for assessing the risks associated with this option strategy.
On Thursday, the put volume among S&P 500 components reached 2.32 million contracts, matching the call volume, resulting in a put:call ratio of 0.75, higher than the long-term median of 0.65, indicating increased investor caution.
