PulteGroup Options Show Potential for Investor Returns

PulteGroup (PHM) has introduced new options, including a strategic put and call contract. With attractive premiums and market conditions, investors may find appealing opportunities to enhance returns.

Date: 20-02-2025

AI Rating: 7

Options Overview: The report outlines new options available for PulteGroup Inc (PHM), with a focus on both put and call contracts. The put contract at the $100 strike price offers a attractive premium of $7.80, leading to a cost basis of $92.20 if exercised, which is a 4% discount to the current trading price of $104.23.

Put Contract Potential: Selling the put could result in a 7.80% return on cash commitment (11.91% annualized), provided the contract expires worthless, which has a 64% probability based on current data. This presents a compelling opportunity for investors considering acquiring PHM shares.

Call Contract Overview: The report also discusses a call contract at the $105 strike price with a bid of $11.90. If investors purchase shares at the current price and sell this covered call, they could achieve a total return of 12.16%, contingent on the stock being called away at expiration, with a 42% chance of the contract expiring worthless.

Volatility Analysis: The implied volatility for both contracts is around 36%, while the historical volatility over the past 250 trading days stands at 31%. This difference may indicate that the market is pricing in a somewhat cautious outlook for the stock, potentially influencing the options premiums.

Stocks: PHM