Exploring Options: Selling Puts on Warby Parker Inc

Investors eyeing Warby Parker Inc (Symbol: WRBY) at a current market price of $16.70 per share may want to explore the strategy of selling puts as an alternative investment option. One intriguing contract available is the December put with a strike price of $10, currently bidding at 55 cents. By collecting this premium, investors could see a 5.5% return based on the $10 commitment, translating to an annualized rate of 8.8%—a metric we refer to as YieldBoost.

Understanding the Risks and Rewards

It’s important to note that selling a put does not allow investors to participate in any upside potential associated with WRBY shares unless the contract is exercised. The option seller will own shares only if the stock price drops below the strike price of $10, making it more favorable than the market price. The seller’s only profit in typical situations comes from the collected premium, providing a potential 8.8% annualized rate of return if Warby Parker Inc’s stock does not fall by more than 40.1%.

Chart Analysis

Below is a chart illustrating the trailing twelve-month trading history for Warby Parker Inc, highlighting the $10 strike position in green:

Utilizing the chart along with fundamental analysis can help evaluate whether selling the December put at the $10 strike for an 8.8% annualized return is a worthwhile risk. The trailing twelve-month volatility for Warby Parker Inc has been calculated at 56%, taking into account the last 250 trading days and the current market price of $16.70. For more put option strategies across various expiration dates, refer to the WRBY stock options page at StockOptionsChannel.com.

Market Activity Overview

During mid-afternoon trading on Tuesday, the put volume among S&P 500 components reached 989,148 contracts, while call volume stood at 1.21 million. This resulted in a put-to-call ratio of 0.82, which is notably higher than the long-term median of 0.65. This indicates a significant increase in put buyers compared to call buyers in the market today.

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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.