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ResMed Inc. Stock Option Strategies and Market Insights

Investors are considering ResMed Inc. for stock purchases. Current strategies include selling puts with an expected return of 3.3%, exceeding the company's 1% dividend yield. Possible risks remain, as stock prices could drop significantly.

Date: 
AI Rating:   6

Market Strategy Overview
Investors eyeing ResMed Inc. (Symbol: RMD) are looking at various strategies, particularly selling puts as an alternative approach to buying shares. One highlighted strategy involves the January 2027 put at the $145 strike price, which presents a bid of $8.80. This premium yields a 6.1% return against a $145 commitment, equating to a 3.3% annualized rate of return.

Earnings Attention
While the report details potential returns from the put options, it does not provide explicit figures on earnings per share (EPS), revenue growth, or net income. Thus, aspects such as profitability remain implicitly addressed but lack specific figures.

Dividend Yield Assessment
Another critical point is the comparison between the annualized return from the puts (3.3%) against ResMed’s own dividend yield of 1%. This indicates that selling the put options could be seen as a more advantageous strategy than simply collecting dividends, given the downside risks of buying shares at the current market price of $220.25.

Risk Considerations
The analysis notes that if ResMed's stock were to drop to the $145 put strike price, it signifies a substantial decline (over 34%). This level introduces heightened risk for investors considering stock purchases for dividend collection compared to potential gains from selling puts.

Market Sentiment and Options Activity
Further, the report mentions put volume among S&P 500 components being at 1.33 million contracts, with an equal call volume, reflecting a put:call ratio above the long-term median. This could suggest a prevailing sentiment of cautiousness or bearishness among investors concerning the underlying stock movements.

Stocks:  RMD