Investors looking at buying shares of Axon Enterprise Inc (Symbol: AXON), but tentative about paying the going market price of $299.63/share, could benefit by considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the January 2026 put at the $170 strike, which has a bid at the time of this writing of $6.90. Collecting that offer as the premium represents a 4.1% return on the $170 commitment, or a 2.3% annual rate of return (at Stock Options Channel we call that the YieldBoost).
Selling a put does not give an investor access to the additional potential of AXON as owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. And the person on the other side of the contract would only benefit from exercising at the $170 strike if doing so produced a better result than selling at the going market price. (Do options carry counterparty risk? This and six other common options myths debunked). So unless Axon Enterprise Inc sees its shares fall 43.2% and the contract is exercised (resulting in a cost basis of $163.10 per share before broker commissions, subtracting the $6.90 from $170), the only upside to the placed seller is of collecting that premium for the 2.3% annual rate of return.
Below is a chart showing the trailing twelve month trading history for Axon Enterprise Inc, and highlighting in green where the $170 strike is located relative to that history:
The chart above, and the historical volatility of the shares, can be a helpful guide in combination with a fundamental analysis to judge whether selling the January 2026 put at the strike of $170 for the 2.3% annual reward represents a good reward for the risks. We calculate the trailing twelve month volatility for Axon Enterprise Inc (taking into account the last 251 trading closing values as well as today’s price of $299.63) to be 36%. For other buying options contracts ideas at the various expirations available, visit StockOptionsChannel.com’s AXON Stock Options page.
In midday trading on Tuesday, put volume among S&P 500 components was 870,714 contracts, with call volume at 1.14M, for a put:call ratio of 0.77 so far for the day, which is unusually high compared to the long term. median put:call ratio of .65. In other words, there are far more buyers in options trading thus far than would normally be seen, compared to call buyers. Find out which 15 call and put options traders are talking about today.
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See also:
• RTTR Internal Purchasing
• BWC Options Chain
• Top Ten Hedge Funds Holding MTUL
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.