Investors eyeing Ulta Beauty Inc. (Ticker: ULTA) may consider an alternative strategy to purchasing shares at the current market price of $646.54. A notable option is the January 2028 put contract at the $430 strike, currently priced with a bid of $30.00. This move could yield a 7% return against a $430 commitment, translating to a 3.7% annualized return.
However, selling the put limits access to potential upside, as the put seller only acquires shares if the contract is exercised, which would happen only if the stock drops by 33.5%. This means the put seller’s maximum gain is the premium collected, while any downside could lead to a cost basis of $400.00 per share when factoring in the premium.
The trailing twelve-month volatility of Ulta Beauty is estimated at 36%, based on the last 251 trading days. Potential investors should evaluate this volatility alongside fundamental analysis to determine if selling the January 2028 put represents an appealing risk-reward profile.
