Investors Explore Selling Puts on NovoCure: A Look at Potential Returns

For investors considering the purchase of shares in NovoCure Ltd (Symbol: NVCR) at the current market price of $18.38 per share, a strategic alternative could involve selling puts. One noteworthy option to analyze is the January 2027 put at the $13 strike, which has a current bid of $2.90. By selling this contract, an investor can collect a premium that reflects a 22.3% return on the $13 commitment, amounting to an annualized return of 11.9%. We refer to this potential profit opportunity as the YieldBoost at Stock Options Channel.

However, it is important to note that selling a put does not grant an investor the same upside potential as owning shares. The seller of a put will only acquire shares if the contract is exercised. Typically, the counterparty to this contract will choose to exercise at the $13 strike price only if it provides a superior outcome compared to the current market price. Therefore, unless NovoCure’s shares dip by 29%, leading to execution of the contract (which would result in a cost basis of $10.10 per share—after accounting for the $2.90 premium), the primary benefit for the put seller is the premium itself, yielding an annualized rate of return of 11.9%.

Below is a chart illustrating the trailing twelve-month trading history for NovoCure Ltd, highlighting the position of the $13 strike in green in relation to that history:

The aforementioned chart, combined with NovoCure’s historical volatility, serves as a useful tool alongside fundamental analysis for assessing whether selling the January 2027 put at the $13 strike offers a favorable risk-reward profile. The trailing twelve-month volatility for NovoCure, based on the last 250 trading days—including today’s price of $18.38—is calculated to be 77%. Investors seeking additional put option strategies with varying expiration dates can visit the NVCR Stock Options page at StockOptionsChannel.com.

On Friday afternoon, the put volume among S&P 500 components reached 1.99 million contracts, while call volume stood at 2.36 million contracts, resulting in a put-to-call ratio of 0.84. This ratio is considerably higher than the long-term median of 0.65, indicating a surge in put buying relative to calls in the options market today.

For more insights, including which 15 call and put options traders are currently active in the market, visit Stock.

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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.