Risk Analysis of Selling APLD Options
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2h ago
0mins
Source: NASDAQ.COM
- Options Selling Risk: Selling puts on Applied Digital does not provide the same upside potential as owning shares, as the seller only acquires shares if the contract is exercised, and unless APLD's stock falls 63.4%, the only benefit is an 11.6% annualized return from the premium.
- Exercise Condition Analysis: The seller can only obtain shares at a cost basis of $10.02 per share if the contract is exercised, calculated by subtracting the $2.98 premium from the $13 strike price, highlighting the inherent risks of selling options.
- Historical Volatility Reference: With a historical volatility of 123%, and considering the last 251 trading days' closing prices alongside the current price of $35.55, investors can assess whether selling the put at the $13 strike is a worthwhile risk-reward proposition.
- Market Price Comparison: The attractiveness of selling options hinges on whether the exercise benefits exceed the current market price, necessitating a clear understanding and judgment of market dynamics by investors.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy APLD?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on APLD
Wall Street analysts forecast APLD stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for APLD is 49.18 USD with a low forecast of 36.00 USD and a high forecast of 99.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
11 Analyst Rating
11 Buy
0 Hold
0 Sell
Strong Buy
Current: 38.070
Low
36.00
Averages
49.18
High
99.00
Current: 38.070
Low
36.00
Averages
49.18
High
99.00
About APLD
Applied Digital Corporation is a designer, builder, and operator of sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking, and blockchain workloads. The Company’s segments include data center hosting (Data Center Hosting Business) and high-performance compute hosting (HPC Hosting Business). The Data Center Hosting Business operates data centers to provide energized space to crypto mining customers. Customer-owned hardware is installed in its facilities, and the Company provides operational and maintenance services for a fixed fee. Its facilities include a 106 megawatt (MW) facility in Jamestown and a 180 MW facility in Ellendale, North Dakota. The HPC Hosting Business designs, builds, and operates data centers which are designed to support high-compute applications using advanced technologies and infrastructures to provide services to customers. Its HPC data center is located at its Polaris Forge 1 campus with 100 MW capacity.
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.
Risk Analysis of Selling APLD Options
- Options Selling Risk: Selling puts on Applied Digital does not provide the same upside potential as owning shares, as the seller only acquires shares if the contract is exercised, and unless APLD's stock falls 63.4%, the only benefit is an 11.6% annualized return from the premium.
- Exercise Condition Analysis: The seller can only obtain shares at a cost basis of $10.02 per share if the contract is exercised, calculated by subtracting the $2.98 premium from the $13 strike price, highlighting the inherent risks of selling options.
- Historical Volatility Reference: With a historical volatility of 123%, and considering the last 251 trading days' closing prices alongside the current price of $35.55, investors can assess whether selling the put at the $13 strike is a worthwhile risk-reward proposition.
- Market Price Comparison: The attractiveness of selling options hinges on whether the exercise benefits exceed the current market price, necessitating a clear understanding and judgment of market dynamics by investors.
Continue Reading
Long-Term Investment Outlook for Iren and Applied Digital
- Market Performance Comparison: Iren's stock has surged over 400% in the past year, while Applied Digital has seen a remarkable 500% increase, highlighting both companies' strong performance in the AI infrastructure sector that has captivated investors.
- Financial Highlights: Iren recently secured a $9.7 billion AI cloud contract with Microsoft, with net income improving from a loss of $51.7 million in the previous year to a gain of $384.6 million in Q1 of fiscal 2026, indicating the success of its business pivot.
- Business Model Differences: Iren retains the flexibility to switch between cryptocurrency and high-performance computing, while Applied Digital focuses on building high-performance data centers and offering long-term leases, allowing it to capitalize on more predictable cash flows.
- Investor Considerations: For investors seeking cash flow predictability, Applied Digital may be more appealing, whereas Iren is suited for those with a higher risk tolerance due to its flexibility and potential for significant returns.
Continue Reading