Evaluating Put Options Strategy for Tutor Perini Corp Shares

Investors eyeing Tutor Perini Corp (Symbol: TPC) at the current market price of $24.75 per share have alternative strategies to consider before making a purchase. One notable approach is the sale of put options, specifically the December put with a $17.50 strike price, which has a bid of $1.55 as of this writing. This premium represents an 8.9% return on the $17.50 commitment, translating to an annualized rate of 11.4%. At Stock Options Channel, we refer to this as the YieldBoost.

It’s important to note that selling puts does not allow investors to benefit from the upside potential of Tutor Perini shares directly, as put sellers only gain stock ownership if the contract is exercised. In this case, the contract would only be exercised at the $17.50 strike if it surpasses the benefits of selling at the current market price. Therefore, unless Tutor Perini’s shares fall by 29.4%, resulting in the contract being exercised and a cost basis of $15.95 per share, the only profit for the put seller comes from collecting the premium, which offers an annualized rate of return of 11.4%.

Below is a chart displaying the trailing twelve-month trading history for Tutor Perini Corp, indicating the position of the $17.50 strike relative to its historical performance:

The chart above, in conjunction with Tutor Perini’s historical volatility, serves as a valuable resource for assessing whether selling the December put at the $17.50 strike offers an adequate reward for the associated risks. Currently, the trailing twelve-month volatility for Tutor Perini, considering the last 249 trading days along with today’s trading price of $24.75, stands at 70%. For additional put options with various expiration dates, you can visit the TPC Stock Options page at StockOptionsChannel.com.

During mid-afternoon trading on Monday, put volume among S&P 500 components reached 2.40 million contracts, contrasted with call volume at 2.73 million. This results in a put:call ratio of 0.88, which is relatively high when compared to the long-term median put:call ratio of 0.65. This indicates an increased presence of put buyers in today’s options trading compared to call buyers. For more insights on the most discussed call and put options today, click here.

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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.