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BioCryst Pharmaceuticals: Selling Puts for Potential Returns
Investors interested in BioCryst Pharmaceuticals Inc (Symbol: BCRX) may want to explore selling put options as a strategy. Currently, BCRX shares trade at $8.49. A notable option to consider is the January 2027 put at a $7 strike price, which bids at 90 cents. Collecting this premium offers a potential return of 12.9% based on the $7 commitment or an annualized rate of 7.5%.
It’s important to note that selling a put does not grant investors the same upside potential as owning shares. The put seller will only end up with shares if the contract is exercised. The counterparty benefits from exercising the option only if the effective purchasing price is lower than the current market value. If BioCryst’s stock declines by 17.8%, the agreement will be exercised, resulting in an effective cost basis of $6.10 per share (after accounting for the 90 cents premium). Until then, the primary benefit for the put seller is the premium for a 7.5% annual return.
The chart below illustrates the trailing twelve-month trading history of BioCryst Pharmaceuticals, with the $7 strike price highlighted in green:
Combining the above chart with fundamental analysis can help assess whether selling the January 2027 put at the $7 strike for a 7.5% annualized rate is worth the risk. The trailing twelve-month volatility for BioCryst Pharmaceuticals, based on the last 250 trading days and the current price of $8.49, stands at 56%. For more put option strategies across various expirations, consult the BCRX Stock Options page.
During mid-afternoon trading on Wednesday, the put volume among S&P 500 components reached 1.30 million contracts, with call volume at 1.53 million, resulting in a put:call ratio of 0.85. This figure is significantly higher than the long-term median put:call ratio of 0.65, indicating an increase in put buyers compared to usual levels.
For additional insights, including popular call and put options discussed today, please explore further resources.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
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