LegalZoom Options Bring 7.3% Annualized Returns Amid Caution

Investors eyeing LegalZoom.com Inc stock may find selling puts to be a viable strategy. With a current market price of $9.43, the January 2027 put at the $7 strike offers a 7.3% annualized rate of return, indicating cautious investor sentiment.

Date: 10-03-2025

AI Rating: 6

Investor Sentiment: Investors are showing caution as they consider purchasing LegalZoom.com Inc (Symbol: LZ) stock priced at $9.43/share. The emphasis on selling put options highlights a risk-averse approach, suggesting concerns about the stock's potential decline.

Put Selling Strategy: The suggested strategy involves selling a January 2027 put at the $7 strike price, which has a current bid of 95 cents. This represents a projected 13.6% return against the $7 commitment, translating to a 7.3% annualized rate of return. This YieldBoost indicates the premium collected provides a good return for the risk undertaken by the seller.

Risk Considerations: Selling a put does not provide the same upside potential as owning shares. The put seller will only take ownership if the contract is exercised, which is contingent on the stock price dropping significantly. A decline of 25.4% would lead to exercising the contract, setting a cost basis at $6.05, after accounting for the premium collected.

Market Volatility: The report also notes a trailing twelve-month volatility calculation for LegalZoom.com Inc at 56%, pointing to significant price fluctuations, which is essential for understanding the potential risks associated with this investment.

Put-Call Volume Analysis: The trading activity showcases a higher-than-normal put volume among S&P 500 components, with a current put:call ratio of 0.88, compared to a long-term median of 0.65. This indicates a higher level of caution among investors, as more traders are opting to buy puts rather than calls, reflecting an increased aversion to risk in the current market environment.

Stocks: LZ