Agilon Health Stock: Selling Puts Offers 18.6% Return Potential

Investors eyeing Agilon Health Inc (AGL) may find opportunities in selling put options. The January 2027 put at $2 offers an annualized return of 18.6%, contingent on market movements. Investors should evaluate the volatility and potential risks before proceeding.

Date: 10-01-2025

AI Rating: 6

Put Option Strategy
Agilon Health Inc is presenting an intriguing opportunity for investors through its put option strategy. The available January 2027 put contract at the $2 strike with a bid of 75 cents offers a premium that translates to a substantial 18.6% annualized return, assuming the investor commits $2 per share.

However, it is crucial to note that selling a put does not give investors the same benefits as owning shares directly since the put seller only gains ownership should the market price fall significantly. The current share price is $2.52, and for the put to be exercised, AGL's price would need to fall by approximately 19.7%. If exercised, the investor's effective cost per share would be $1.25, factoring in the premium received.

The report indicates that the trailing twelve-month volatility for Agilon Health Inc stands at 95%. This high volatility can introduce substantial risks but also highlights the speculative nature of engaging in options trading, especially with stock prices fluctuating significantly. The combination of volatility and potential returns from selling puts makes for an interesting proposition for experienced investors who are willing to bear the risk. However, it is advisable to conduct fundamental analysis alongside this strategy for better assessment.

In summary, while the potential annualized return of 18.6% is appealing, investors must consider market conditions and volatility before deciding. The put-selling strategy might suit those looking for income rather than direct equity exposure.

Stocks: AGL