Strategic Opportunity: Selling Puts on DexCom Inc. (DXCM)
Investors considering a buy on DexCom Inc. (Symbol: DXCM) may find value in selling put options instead of buying shares at the current market price of $71.62 per share. A noteworthy put contract is the January 2027 put with a $45 strike price, which has a bid of $4.40 as of now. By collecting this bid, investors could secure a 9.8% return against a $45 commitment, translating to a 5.7% annualized rate of return.
Notably, selling a put does not grant the same upside potential as owning shares. The put seller only acquires shares if the contract is exercised. The other party will choose to exercise the put if it offers a better outcome than the current market price. If DexCom’s shares decrease by 37.3%, crossing the $45 strike, the put seller faces a cost basis of $40.60 per share after accounting for commissions (which deduct the $4.40 premium from the strike price). Therefore, the only direct benefit to the put seller lies in earning the collected premium for the 5.7% annualized return.
The chart below illustrates the trailing twelve-month trading history for DexCom Inc., with the $45 strike marked in green against that historical backdrop:
This chart, alongside DexCom’s historical volatility, serves as a valuable tool in conjunction with fundamental analysis. Investors can assess whether selling the January 2027 put at the $45 strike for a 5.7% annualized return is a favorable risk-reward proposition. The trailing twelve-month volatility for DexCom Inc. is calculated at 65%, based on the last 249 trading day closing values plus today’s price of $71.62. For additional put option strategies with varying expirations, visit the DexCom Stock Options page for further insights.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
