PureCycle Technologies: Selling Puts as Investment Strategy

Investors eyeing PureCycle Technologies Inc (PCT) share purchase may find it prudent to consider selling puts, particularly the January 2026 put at the $7 strike for a promising 25.9% annualized return, as per a recent report analyzing stock options strategies.

Date: 20-09-2024

AI Rating: 7

The report highlights an investment strategy involving the selling of put options for PureCycle Technologies Inc (PCT). Specifically, it discusses a January 2026 put at the $7 strike, which offers a bid of $2.40. This premium indicates a 34.3% return against the $7 commitment and a remarkable 25.9% annualized rate of return. For investors cautious about the current price of $9.71, selling this put provides a way to potentially profit without outright purchasing shares.

However, selling a put does not allow investors to participate in the upside potential of owning shares, meaning that unless the stock price falls 28% and the contract is exercised, the only profit achieved will stem from the premium collected. A price drop leading to ownership of the shares would create a cost basis of $4.60 per share after accounting for the $2.40 premium, which could be seen as favorable compared to the market price if the stock remains above this after the option's expiration.

Furthermore, the report outlines the historical volatility of PureCycle Technologies Inc at 118%, which should be factored in alongside this options strategy. Investors can use this information, alongside fundamental analysis, to evaluate if this elevated volatility justifies the potential returns from selling the put.

Stocks: PCT