Risks and Rewards of Selling Put Options
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy CRL?
Source: NASDAQ.COM
- Options Selling Mechanism: Selling put options does not provide investors with the same upside potential as owning shares, as the seller only acquires shares if the contract is exercised, and if the stock price does not fall to the strike price, the seller only collects the premium.
- Yield Analysis: If Charles River Laboratories' shares do not decline by 6.8%, the only upside for the seller is the 18.8% annualized return, highlighting the asymmetry between risk and reward in options trading.
- Volatility Consideration: With a trailing twelve-month volatility of 58% for Charles River Laboratories, combining this with fundamental analysis can help investors assess whether selling puts at the $150 strike price is worthwhile, especially with the current stock price at $161.49.
- Market Trading Dynamics: During mid-afternoon trading on Friday, the put volume among S&P 500 components reached 1.33 million contracts, matching call volume, indicating a higher demand for puts than the long-term median, reflecting investor expectations of market volatility.
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Analyst Views on CRL
Wall Street analysts forecast CRL stock price to rise
12 Analyst Rating
9 Buy
3 Hold
0 Sell
Strong Buy
Current: 158.740
Low
185.00
Averages
226.70
High
265.00
Current: 158.740
Low
185.00
Averages
226.70
High
265.00
About CRL
Charles River Laboratories International, Inc. is a drug development company. It provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and academic institutions around the globe accelerate their research and drug development efforts. Its Research Models and Services segment includes three businesses that provide foundational tools that enable its clients to discover new molecules: Research Models, Research Model Services, and Cell Solutions. Its Discovery and Safety Assessment segment provides regulated and non-regulated DSA services to support the research, development, and regulatory-required safety testing of potential new drugs, including therapeutic discovery and optimization plus in vitro and in vivo studies, laboratory support services, and strategic non-clinical consulting and program management to support product development. Its Manufacturing Solutions segment includes Microbial Solutions and Biologics Solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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Risks and Rewards of Selling Put Options
- Options Selling Mechanism: Selling put options does not provide investors with the same upside potential as owning shares, as the seller only acquires shares if the contract is exercised, and if the stock price does not fall to the strike price, the seller only collects the premium.
- Yield Analysis: If Charles River Laboratories' shares do not decline by 6.8%, the only upside for the seller is the 18.8% annualized return, highlighting the asymmetry between risk and reward in options trading.
- Volatility Consideration: With a trailing twelve-month volatility of 58% for Charles River Laboratories, combining this with fundamental analysis can help investors assess whether selling puts at the $150 strike price is worthwhile, especially with the current stock price at $161.49.
- Market Trading Dynamics: During mid-afternoon trading on Friday, the put volume among S&P 500 components reached 1.33 million contracts, matching call volume, indicating a higher demand for puts than the long-term median, reflecting investor expectations of market volatility.
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- Live Webcast Opportunity: Investors will have the opportunity to listen to a live webcast of the conference call through the Investor Relations section of the company's website, ensuring timely access to key information for all stakeholders.
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- Economic Indicators: This downturn occurred despite a better-than-expected jobs report from the Bureau of Labor Statistics and a relatively stable inflation report.
See More
Charles River Laboratories Named Among Top Mid-Cap AI Stocks
- Price Target Increase: Analyst Charles Rhyee at TD Cowen raised the price target for Charles River Laboratories from $197 to $251 on January 22, indicating a potential upside of 38.49%, reflecting strong market confidence in the company's future performance.
- Strong Earnings Outlook: In its Q4 earnings preview, TD Cowen expressed optimism about solid quarterly results for Charles River, suggesting that the 2026 guidance could serve as a pivotal moment for operating conditions, providing investors with clearer short-term insights.
- Gene Therapy Collaboration: On January 21, Charles River announced a new gene therapy collaboration with Gazi University Faculty of Medicine, providing plasmid DNA for AAV production, aimed at advancing research on a rare inherited disorder, showcasing the company's proactive approach in innovative fields.
- Global Service Network: Charles River Laboratories offers non-clinical development, drug discovery, and safety testing services across the U.S., Asia-Pacific, Europe, and Canada, demonstrating its extensive influence and business diversity in the global market.
See More
Risks and Rewards of Selling Put Options
- Options Selling Mechanism: Selling put options does not provide investors with the same upside potential as owning shares, as the seller only acquires shares if the contract is exercised, and if the stock price does not fall to the strike price, the seller only collects the premium.
- Yield Analysis: If Charles River Laboratories' shares do not decline by 6.8%, the only upside for the seller is the 18.8% annualized return, highlighting the asymmetry between risk and reward in options trading.
- Volatility Consideration: With a trailing twelve-month volatility of 58% for Charles River Laboratories, combining this with fundamental analysis can help investors assess whether selling puts at the $150 strike price is worthwhile, especially with the current stock price at $161.49.
- Market Trading Dynamics: During mid-afternoon trading on Friday, the put volume among S&P 500 components reached 1.33 million contracts, matching call volume, indicating a higher demand for puts than the long-term median, reflecting investor expectations of market volatility.
See More
Charles River Laboratories to Release Q4 2025 Results and 2026 Guidance on February 18
- Earnings Release Schedule: Charles River Laboratories is set to announce its Q4 and full-year 2025 financial results along with 2026 guidance on February 18, 2025, before market open, aiming to provide investors with a clear outlook for the future.
- Conference Call Details: A conference call is scheduled for February 18, 2025, at 8:30 a.m. ET to discuss the financial results and guidance, enhancing communication and transparency with investors.
- Live Webcast Opportunity: Investors will have the opportunity to listen to a live webcast of the conference call through the Investor Relations section of the company's website, ensuring timely access to key information for all stakeholders.
- Replay Access: Following the call, a replay will be available on the same website, further improving the accessibility and transparency of information for investors.
See More
Charles River Laboratories Under Investigation, Revenue Growth Expected to Decline by 400 Basis Points
- Investigation Launched: Former Louisiana Attorney General Charles C. Foti announces that Kahn Swick & Foti, LLC is investigating Charles River Laboratories for potential breaches of fiduciary duties to shareholders.
- Legal Action: Charles River and its executives are facing a securities class action lawsuit for failing to disclose material information, which could further impact the company's reputation and stock price.
- Revenue Growth Decline: The company disclosed in February 2023 that it suspended shipments of non-human primates from Cambodia due to a subpoena from the U.S. Department of Justice, leading to an expected revenue growth decline of 200 to 400 basis points, directly affecting annual financial performance.
- Compliance Risks: Kahn Swick & Foti's investigation will assess whether Charles River violated state or federal laws, and if confirmed, could lead to more severe legal consequences and financial losses.
See More
U.S. Stock Index Futures Rise as Bank Earnings Boost Market Sentiment
- Market Sentiment Rebound: U.S. stock index futures rose with S&P 500 futures up 0.42%, Nasdaq 100 futures up 0.56%, and Dow futures up 0.21%, indicating a boost in investor confidence driven by upbeat bank earnings and a tech rally.
- Treasury Yield Fluctuations: The U.S. 2-year Treasury yield fell to 3.57%, down 0.17%, while the 10-year yield edged lower to 4.17%, down 0.12%; conversely, the 30-year yield ticked up to 4.81%, adding 0.12%, reflecting mixed market expectations about future economic conditions.
- Premarket Trading Winners: In premarket trading, Ralph Lauren gained 1.74%, Baker Hughes rose 1.63%, and Robinhood Markets increased by 1.63%, indicating strong market performance that may attract further investor interest.
- Premarket Trading Losers: Conversely, Brown-Forman fell 4.33%, J.B. Hunt Transport Services dropped 4.19%, and Charles River Laboratories declined 3.13%, suggesting these companies are under market pressure, potentially impacting their short-term stock performance.
See More
