How We're Earning A 13%+ Yield Selling Puts On Rocket LabThe commercial space sector is booming, and Rocket Lab NASDAQ:RKLB stands out as one of the most promising players—not just another speculative startup or space tourism hype. But while the company is making strong operational strides, its stock valuation appears stretched, prompting a more strategic approach to investing.
📈 Strong Execution, Growing Opportunity
Rocket Lab continues to hit meaningful milestones. In Q1, the company:
Secured a U.S. Space Force contract for its upcoming Neutron heavy-lift rocket.
Won hypersonic-related contracts with the U.S. Air Force and the U.K. Ministry of Defense.
Successfully completed five Electron rocket launches and booked eight more.
Made a strategic acquisition for developing "Flatellites," enhancing vertical integration.
Revenue rose 32% year-over-year, with gross margins in the mid-30% range. Importantly, Rocket Lab has a $1 billion+ revenue backlog, with over half expected to convert in the next year, and a healthy mix of government and commercial clients across both its Launch and Space Systems divisions.
💰 Valuation: Big Potential, Bigger Price Tag
Rocket Lab's business is solid, but its valuation raises red flags. With a price-to-sales ratio near 55x (compared to SpaceX's ~14x), investors are paying a steep premium for future success. The company is still unprofitable, and the high valuation leaves little room for error. Simply put, the market may be rewarding Rocket Lab too early.
📊 The Smarter Move: Sell Put Options
Instead of buying shares at inflated levels, the better approach is to sell put options—a strategy that earns upfront cash and offers the opportunity to buy shares at a discount if the stock drops.
Recommended trade:
Sell October 17th $30 strike put options
Premium: ~$96 per contract
Required buying power: ~$2,904
Implied return: ~3.3% over 90 days, or ~13.4% annualized
This provides income now, while still giving investors potential exposure to Rocket Lab at a 40% discount to current prices.
⚠️ Risks to Consider
This isn’t risk-free. If Rocket Lab’s execution falters—especially with Neutron—shares could drop sharply. Selling puts means you may still be forced to buy at $30, even if the stock falls much lower. This strategy works best for investors comfortable owning RKLB long term at a lower entry price.
✅ Bottom Line
Rocket Lab is a strong business, but the stock looks overheated. Selling put options offers a more balanced way to participate in its growth story—earning income now while positioning to buy the stock later at a better value.
Rating: Buy (via options strategy)
