Investors looking to purchase shares of Charles River Laboratories International Inc. (CRL) at the current market price of $155.19 may consider selling November put options at a $150 strike price, which has a bid premium of $11.10. This strategy offers a 7.4% return on the $150 commitment, equating to a 21.4% annualized rate of return.
The success of this put option strategy hinges on whether the stock’s price declines to $150 or below. If the contract is exercised, the effective cost basis would be $138.90 per share after accounting for the premium. The historical volatility of CRL over the past year is calculated at 56%.
On the trading day in question, S&P 500 put volume stood at 2.83 million contracts, compared to call volume of 3.14 million, resulting in a put-to-call ratio of 0.90, indicating a higher than average interest in put options.
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