Alternative Investment Strategy for AdaptHealth Corp: Selling Puts

Investors considering a purchase of AdaptHealth Corp (Symbol: AHCO) at the current market price of $8.89 per share may find it advantageous to explore the strategy of selling puts. One notable contract is the June 2026 put at the $7.50 strike, currently bid at 75 cents. By collecting this premium, investors can achieve a 10% return against the $7.50 commitment, translating to an annualized return of 8.9%.

It’s important to understand that selling a put does not afford investors the potential upside of owning shares. The put seller will only acquire shares if the contract is exercised. The counterparty would only take action at the $7.50 strike if it was more beneficial than selling at the current market price. If AdaptHealth Corp’s stock price does not decline by 15.4%, resulting in an effective cost basis of $6.75 per share (after accounting for the 75-cent premium), the put seller’s only upside is the collected premium yielding an 8.9% annualized return.

Below is a chart showing the trailing twelve-month trading history for AdaptHealth Corp, marking the $7.50 strike in green for reference:

The chart, alongside the stock’s historical volatility, serves as an essential tool for analyzing whether selling the June 2026 put at the $7.50 strike for an 8.9% annualized return offers a favorable risk-reward balance. We calculate the trailing twelve-month volatility for AdaptHealth Corp, based on the last 250 trading days and the current price of $8.89, to be 58%. For additional put option ideas across various expirations, please visit the AHCO Stock Options page.

In 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, yielding a put-to-call ratio of 0.82 for the day. This figure is significantly above the long-term median put-to-call ratio of 0.65, indicating a higher than usual number of put buyers compared to call buyers in today’s options trading.

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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.