Quick Summary
- Investors interested in Zeta Global Holdings Corp (ZETA) but hesitant about the current stock price might explore selling put options.
- A specific example involves the January 2028 put with a $7.50 strike price, offering a potential premium.
- Selling puts can provide income through premiums but limits upside participation compared to owning stock directly.
- The decision to sell a put should be informed by historical stock data and fundamental analysis of ZETA.
Evaluating Put Option Strategies for ZETA Investors
For investors considering a purchase of Zeta Global Holdings Corp (ZETA) stock but finding the current market price of $17.06 per share to be a barrier, exploring alternative investment strategies is advisable. One such strategy involves the sale of put options, which can offer a different avenue for potential returns.
📍 Among the various put contracts available, a particular option that warrants attention is the January 2028 put with a $7.50 strike price. At the time of this writing, this contract has a bid price of $1.25. Receiving this premium represents a notable return on the capital commitment. Specifically, it translates to a 16.7% return against the $7.50 commitment, or an annualized rate of return of 7.7%, a metric that Stock Options Channel refers to as YieldBoost.
Understanding the Mechanics and Risks of Selling Puts
It is important to note that selling a put option does not grant an investor the same upside potential that owning shares directly provides. A put seller only acquires shares if the contract is exercised. The counterparty would typically only exercise the option at the $7.50 strike if it presented a more favorable outcome than selling the shares at their prevailing market price. The potential for upside for the put seller is primarily derived from the collected premium, yielding an annualized return of 7.7%, unless Zeta Global Holdings Corp’s stock experiences a significant decline.
📊 In the scenario where Zeta Global Holdings Corp’s shares fall by 55.7%, leading to the contract’s exercise, the investor would end up owning shares with a cost basis of $6.25 per share, after subtracting the collected premium from the strike price. This calculation does not include broker commissions.
Visualizing the Option Strategy Against ZETA’s Trading History
The chart below illustrates the trailing twelve-month trading performance of Zeta Global Holdings Corp. The $7.50 strike price is highlighted in green, showing its position relative to the stock’s historical price movements.
⚡ The historical volatility of ZETA’s stock, combined with the visual representation provided by the chart, can serve as a valuable tool. When used in conjunction with fundamental analysis, it can assist investors in assessing whether the 7.7% annualized return from selling the January 2028 put at the $7.50 strike adequately compensates for the associated risks.
💡 Calculating the trailing twelve-month volatility for Zeta Global Holdings Corp, based on the last 250 trading days and the current price of $17.06, reveals a figure of 74%.
Expert Summary
The exploration of selling put options, such as the January 2028 $7.50 strike for ZETA, presents an alternative income-generating strategy for investors hesitant about the current stock price. While this approach offers yield through premiums, it also involves specific risks and limitations on upside participation.