Investors considering a purchase of Equity Residential (EQR) shares, currently priced at $64.81, may explore selling put options as an alternative strategy. One notable option is the January 2026 put with a $57.50 strike, offering a bid of $1.35. This bid translates to a 2.4% return based on the $57.50 commitment, equating to a 5.8% annualized rate of return.
The annualized return of 5.8% significantly exceeds the current 4.3% annualized dividend yield for EQR, suggesting a potentially more favorable risk-reward profile for put sellers compared to direct stock purchases. The stock would need to decline by 11.24% for put exercise to become beneficial, indicating greater risk for investors opting for dividends over options strategies.
As of mid-afternoon trading on Wednesday, S&P 500 put volume stood at 1.52 million contracts, matched by call volume, reflecting a put:call ratio of 0.72, surpassing the long-term median of 0.65, indicating heightened interest in put options among traders.
