Investors Consider Selling Puts on The Baldwin Insurance Group

For investors interested in acquiring shares of The Baldwin Insurance Group Inc (Symbol: BWIN) but hesitant about the current market price of $40.76 per share, selling puts emerges as a viable alternative. One particular opportunity is the September put contract with a $35 strike, currently bidding at $2.50. This premium offers a 7.1% return based on the $35 commitment, translating into a 19.2% annualized rate of return.

It is important to note that selling a put doesn’t provide the same upside potential as owning shares directly. A put seller only acquires shares if the contract is exercised, which would occur only if exercising produces a better outcome than selling at the current market price. Unless The Baldwin Insurance Group Inc’s shares decline by 14.1%, resulting in a cost basis of $32.50 per share (after considering the $2.50 premium), the put seller receives the sole advantage of the premium, which yields that 19.2% annualized return.

Below is a chart showcasing the trailing twelve-month trading history for The Baldwin Insurance Group Inc, indicating the $35 strike location in green:

This chart, along with the stock’s historical volatility, can guide investors in evaluating whether selling the September put at the $35 strike for a 19.2% annualized return compensates adequately for the associated risks. The trailing twelve-month volatility for The Baldwin Insurance Group Inc is calculated to be 44%, based on the last 250 trading day closing values and the current price of $40.76. For additional put option ideas across different expiration dates, investors can explore the BWIN stock options page.

During mid-afternoon trading on Tuesday, the put volume among S&P 500 components reached 989,148 contracts, compared to call volume of 1.21 million, resulting in a put:call ratio of 0.82. This is notably higher than the long-term median put:call ratio of 0.65, reflecting increased demand for puts compared to calls in today’s options trading.

For insight on which 15 call and put options traders are currently discussing, further research can be pursued.

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