Investors considering a purchase of Carmax Inc. (KMX) at the current market price of $62.31/share may find the January 2027 put option at a $50 strike appealing. The bid for this put is currently $4.80, offering a 9.6% return on the $50 commitment, equating to a 6.4% annualized rate of return.
Selling this put does not provide exposure to KMX’s potential upside; it only results in owning shares if the contract is exercised, which would require a price drop of 19.5% to gain a cost basis of $45.20 per share after accounting for the premium.
On Friday, put volume among S&P 500 components reached 2.83 million contracts, contrasted with call volume of 3.14 million, resulting in a put:call ratio of 0.90, considerably higher than the long-term median of 0.65.
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