Exploring Put Options for Centrus Energy Corp as Market Price Fluctuates

Investors eyeing Centrus Energy Corp (Symbol: LEU) may hesitate to buy shares at the current market price of $55.15 per share. An alternative strategy they could consider is selling put options. One intriguing option is the October put contract with a $45 strike price, which has a bid of $7.80 as of this writing. By selling this put, investors can collect a premium that represents a 17.3% return against the $45 commitment, translating to an impressive annualized rate of return of 33.1%, which we refer to as the YieldBoost at Stock Options Channel.

It’s important to note that selling a put does not offer the same upside potential as owning shares. The put seller will only end up owning shares if the option is exercised. If the option holder exercises the contract at the $45 strike, it would only be advantageous if the market price is below this level. Currently, the stock would need to decline by 19.1% for the put to be exercised, resulting in a cost basis of $37.20 per share after accounting for the premium received from selling the put. Thus, the primary benefit for the put seller is the premium collected, yielding a 33.1% annualized return if the option is not exercised.

Below is a chart displaying the trailing twelve-month trading history for Centrus Energy Corp, highlighting the $45 strike price in green:

The chart and the stock’s historical volatility can guide investors in assessing whether the October put option offers acceptable rewards for the associated risks. We calculate the trailing twelve-month volatility for Centrus Energy Corp, based on the last 251 trading days’ closing values and the current price of $55.15, to be 94%. For additional put options ideas across various expirations, please visit the LEU Stock Options page at StockOptionsChannel.com.

In mid-afternoon trading on Wednesday, put volume among S&P 500 components reached 1.09 million contracts, while call volume was at 1.39 million, yielding a put:call ratio of 0.78. This ratio is unusually high compared to the long-term median of 0.65, indicating a significantly higher level of put buying activity in options trading today than the norm. Discover which 15 call and put options traders are making headlines today.

Top YieldBoost Puts of the S&P 500 »

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