“Secure a 17.9% Annualized Return: Commit to Purchase Flagstar Financial at $12 with Options”

Published On: May 6, 2025 12:02 pm

Investors Consider Put Strategy for Flagstar Financial Shares

Investors interested in Flagstar Financial Inc. (Symbol: FLG) might think twice before purchasing shares at the current market price of $12.04. A potentially lucrative alternative is selling put options. One specific option to note is the January 2026 put at the $12 strike, currently bid at $1.50. Selling this put would yield a 12.5% return based on the $12 commitment, translating to an annualized rate of 17.9%.

It’s essential to understand that selling a put does not offer the same upside potential as owning shares. The seller only owns shares if the put is exercised. The other party would benefit from exercising the option only if it results in a better outcome than selling at the current market price. If Flagstar’s shares were to decline 0.2% and the put is exercised, the effective cost basis would be $10.50 per share (accounting for the $1.50 premium). Thus, the put seller’s only gain comes from the premium, providing that 17.9% annualized return.

Furthermore, this annualized return of 17.9% significantly exceeds Flagstar Financial’s current 0.3% annualized dividend yield by 17.6%. Investors aiming to buy shares to collect the dividend face a greater risk of loss. The shares must drop by 0.25% to reach the $12 strike price.

When discussing dividends, it’s crucial to recognize their unpredictability. Dividend amounts tend to fluctuate with a company’s profitability. Reviewing Flagstar Financial’s dividend history will provide useful insights into the likelihood of maintaining the current 0.3% annualized yield.

FLG Dividend History Chart

Below is a chart displaying Flagstar Financial’s trailing twelve-month trading history, with the $12 strike price highlighted in green:

Flagstar Trading History Chart

Analyzing this chart alongside the historical volatility can help assess whether selling the January 2026 put at the $12 strike for a 17.9% annualized return adequately compensates for the associated risks. The trailing twelve-month volatility for Flagstar Financial, calculated from the last 250 trading days and the current price of $12.04, is noted at 122%. For additional put contract options across different expirations, visit the FLG Stock Options page.

As of mid-afternoon trading on Tuesday, the put volume among S&P 500 components reached 989,148 contracts, with call volume at 1.21 million, resulting in a put-call ratio of 0.82. This figure is notably high compared to the long-term median of 0.65, indicating an increased number of put buyers in today’s options trading than typical.

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