Evaluating Put Options for ICU Medical: A Strategic Approach

Investors eyeing ICU Medical Inc (Symbol: ICUI) at the current market price of $137.57 per share may want to consider alternative strategies such as selling put options. An attractive option to explore is the November put contract at the $110 strike, with a current bid of $10.00. This premium provides a 9.1% return based on the $110 commitment, translating to an annualized rate of 14.8%. At Stock Options Channel, we refer to this as the YieldBoost.

Understanding the Risks and Returns of Selling Puts

It’s important to note that selling a put does not grant the same upside potential as owning shares outright. The seller of the put will only acquire shares if the contract is exercised. The option is exercised by the buyer if it becomes more advantageous than selling at the current market price. If ICU Medical’s share price does not decline by 20% and does not reach the $110 strike, the put seller’s primary profit lies in collecting the premium, which reflects the 14.8% annualized return.

Below is a chart that illustrates the trailing twelve-month trading history for ICU Medical Inc, pinpointing the $110 strike within that context:

Assessing Volatility and Market Trends

Utilizing the chart above alongside an analysis of ICU Medical’s historical volatility can provide useful insights into whether selling the November put at the $110 strike is worth the risk for a 14.8% annualized return. We calculated the trailing twelve-month volatility for ICU Medical, using the last 251 trading days along with the current price of $137.57, to be 43%. For additional put options contract ideas across various expirations, investors can visit the ICUI Stock Options page on StockOptionsChannel.com.

In mid-afternoon trading on Friday, S&P 500 components recorded put volume of 1.12 million contracts, equaling call volume at 1.12 million, resulting in a put:call ratio of 0.74. This figure indicates a higher-than-normal level of put buyers compared to the long-term median put:call ratio of 0.65, suggesting increased caution among traders in the options market.

For further insights on trending call and put options, see what 15 traders are currently discussing.

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• Funds Holding ACDC
• JNPR Technical Analysis
• Institutional Holders of BDC

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