Consider Selling Puts on Invesco Ltd for Steady Returns

Investors eyeing shares of Invesco Ltd (Symbol: IVZ) at the current market price of $14.91 might find an alternative strategy in selling puts. Specifically, the January 2027 put option with a $10 strike price offers a bid of 80 cents as of this writing. This premium provides an 8% return on the $10 commitment, translating to a 4.3% annualized rate of return, also known as the YieldBoost.

It’s important to note that selling a put does not grant an investor the upside potential associated with outright share ownership. The put seller only acquires shares if the contract is exercised. For the contract to be exercised at the $10 strike, the market price must drop below this level. This means that the other party would only choose to exercise if it yields a better outcome than selling at the prevailing market price. Should Invesco Ltd’s shares decline by 32.2%, the put would be exercised, resulting in a cost basis of $9.20 per share after accounting for the premium collected ($10 strike minus 80 cents).

The accompanying chart illustrates the trailing twelve-month trading history for Invesco Ltd, highlighting the position of the $10 strike relative to this historical data:

Analyzing the chart, alongside Invesco’s historical volatility, can provide insights into whether selling the January 2027 put at the $10 strike embodies an acceptable risk-return profile. Our calculations show Invesco’s trailing twelve-month volatility—based on the last 250 trading day closing values and the current price of $14.91—stands at 31%. Investors may find additional put option ideas across various expiration dates on the IVZ Stock Options page at StockOptionsChannel.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.