Interesting SRPT Put And Call Options For December 19th

An analysis of Sarepta Therapeutics (SRPT), currently trading at $23.30, outlines two options strategies for investors seeking enhanced yield or a lower entry point. Selling a $22.50 strike put for a $3.00 premium could result in a $19.50 cost basis if assigned, or a 13.33% return (97.25% annualized) if it expires worthless, with a 61% probability. Alternatively, a covered call strategy using a $25.00 strike call for a $2.95 premium offers a potential 19.96% total return if called away, or a 12.66% premium boost (92.35% annualized) if it expires worthless, with a 48% probability. The analysis also highlights high implied volatilities for these options, ranging from 109% to 115%, compared to the 108% trailing 12-month historical volatility.

Analysis

The article outlines two distinct options strategies for Sarepta Therapeutics (SRPT), currently trading at $23.30, designed to either achieve a lower entry point or enhance portfolio yield. Selling a $22.50 strike put for a $3.00 premium would result in a potential cost basis of $19.50 if assigned, offering a 13.33% return (97.25% annualized) if the option expires worthless, with a 61% probability. This strategy targets investors interested in acquiring SRPT shares at a discount.

Alternatively, a covered call strategy involves selling a $25.00 strike call for a $2.95 premium. This could generate a 19.96% total return if SRPT shares are called away by the December 19th expiration. If the call expires worthless, the investor retains their shares and collects a 12.66% premium boost (92.35% annualized), with a 48% probability.

Both strategies leverage elevated implied volatilities, with the put at 109% and the call at 115%, which are slightly above SRPT's trailing twelve-month historical volatility of 108%. This indicates robust option premiums, offering attractive potential returns for investors employing these defined-risk approaches in a high-volatility environment.

Key Decisions for Investors

• Investors bullish on SRPT but seeking a lower entry point could consider selling the $22.50 strike put to potentially acquire shares at a net $19.50 or earn a 13.33% yield if not assigned.
• Current SRPT shareholders willing to cap upside may implement a covered call strategy using the $25.00 strike, which offers a 12.66% premium boost or a 19.96% total return if shares are called away.
• Given the high implied volatility, investors should carefully evaluate if current option premiums adequately compensate for the potential risks of missing significant upside or being assigned shares at a price that could still decline further.