Commit To Buy Relay Therapeutics At $5, Earn 22.4% Annualized Using Options

The piece analyzes a selling-a-put trade on Relay Therapeutics (RLAY): a June 2026 $5 strike put that pays a $0.65 premium (implying a $4.35 per-share cost basis if assigned) and equates to a 22.4% annualized return today versus the $6.32 share price; assignment would occur only if shares fall about 20.9% to $5. The write-up stresses that the seller’s only upside is the premium unless assigned, notes the stock’s elevated trailing-12-month volatility of 75% (250 trading days) which increases assignment risk, and recommends combining volatility and fundamental analysis to judge whether the premium adequately compensates for the downside exposure.

Analysis

The article evaluates selling a June 2026 Relay Therapeutics (RLAY) $5 put that currently trades for a $0.65 premium versus a spot price of $6.32; assignment would occur only if shares fall to $5 (about a 20.9% decline), producing an effective cost basis of $4.35 per share before commissions. The quoted trade equates to a 22.4% annualized return for the put seller, but the seller’s upside is limited to collecting that premium unless assignment creates a long equity position.

Risk considerations center on RLAY’s elevated trailing-12-month volatility of 75% (250 trading days), which materially raises the probability of a large move toward the $5 strike and therefore assignment risk; the piece recommends combining this volatility view with fundamental analysis to judge whether the premium compensates for downside exposure. The author also flags common options myths (including counterparty risk), underscoring that structural option characteristics—not credit concerns—drive the payoff profile.

Given the mildly positive but cautious market tone and low market-impact score, the trade is effectively a yield-enhancement strategy suitable only for investors comfortable owning RLAY at a $4.35 basis or for those who view the 22.4% annualized premium as adequate compensation given the 75% historical volatility and company fundamentals.

Key Decisions for Investors

• Consider selling the June 2026 RLAY $5 put only if you are prepared to be assigned and to own RLAY at the $4.35 premium-adjusted cost basis, because the seller’s only guaranteed upside is the $0.65 premium
• Weigh the 22.4% annualized yield against the stock’s 75% trailing-12m volatility and ~20.9% drop needed for assignment — perform a volatility-backed probability analysis and a fresh fundamental review of Relay before sizing the trade
• Structure the position as cash-secured, size it conservatively relative to portfolio risk, and monitor price action and implied volatility so you can roll, close, or hedge if RLAY approaches $5 or volatility compresses