Investors Consider Put Selling Strategy for Vaxcyte Inc Shares

Investors interested in acquiring shares of Vaxcyte Inc (Symbol: PCVX) but hesitant about the current market price of $31.11 per share might explore selling put options as an alternative strategy. A noteworthy option available is the December put at the $20 strike, which currently has a bid of $1.95. This premium can yield a 9.8% return based on the $20 commitment, translating into a 14.7% annualized rate of return, a method referred to as YieldBoost in the options market.

It is important to note that selling a put does not provide the same upside potential as owning the shares outright. The put seller will only acquire shares if the contract is exercised. The counterparty will only benefit from exercising the option at the $20 strike if it produces a better outcome than selling at the current market price. Unless Vaxcyte Inc experiences a 35.7% decline and the option is exercised, resulting in an effective cost basis of $18.05 per share (after deducting the $1.95 premium), the primary benefit for the put seller remains the premium income, equating to the projected 14.7% annualized return.

The following chart illustrates the trailing twelve-month trading history for Vaxcyte Inc, with the $20 strike highlighted in green to indicate its position against prior price movements:

The chart, combined with Vaxcyte Inc’s historical volatility, serves as a useful tool for assessing whether selling the December put at the $20 strike for a 14.7% annualized rate of return is a worthwhile reward against the risks involved. The trailing twelve-month volatility for Vaxcyte Inc, based on the last 249 trading days and the current price of $31.11, has been calculated at 83%. For further put options strategies with varying expirations, visit the PCVX Stock Options page at StockOptionsChannel.com.

During mid-afternoon trading on Monday, put volume among S&P 500 components reached 961,483 contracts, while call volume stood at 1.13 million, resulting in a put:call ratio of 0.85. This is notably high compared to the long-term median put:call ratio of 0.65. This indicates a significantly higher number of put buyers in options trading today relative to call buyers. To explore which 15 call and put options traders are discussing today, click here.

Top YieldBoost Puts of the S&P 500 »

Also See:

• Socially Responsible Preferreds
• PME Shares Outstanding History
• Institutional Holders of BLNK

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