Get 20% Annualized Yield on the World's Largest Chlorine Franchise — Priced at a Cycle Bottom
Olin is the #1 global chlor-alkali producer, marked down as if this trough never ends. We collect ~20% annualized to wait — or own it at $19.18, near book value. Owned by Bloomstran, Pzena and others.
The trade: Selling a Cash Secured Put
Ticker: OLN
Current Price: ~$24.50
Strike Price: $20.00
Strike Price to Current Price: −18%
Expiration: August 21, 2026
Premium: ~$0.82
Annualized Return: ~20%
Actual price if assigned: ~$19.18
The Company
Olin has been around since 1892. Today it runs three businesses: Chlor Alkali Products and Vinyls (chlorine, caustic soda, and vinyl derivatives), Epoxy, and Winchester — the ammunition brand, selling to both commercial buyers and the U.S. military.
The core of the company is chlor-alkali. Olin is the largest global producer of chlorine and caustic soda, the building-block chemicals behind water treatment, PVC, pharmaceuticals, and most of modern manufacturing. It’s a roughly $6.5 billion revenue business with a market cap under $3 billion.
What sets Olin apart from a typical commodity producer is its commercial model. Instead of running flat-out and chasing volume, management deliberately manages output to defend pricing — what they call a “value-first” approach. The point is to protect the value of each electrochemical unit through the down part of the cycle rather than flood the market and crush its own margins.
The Opportunity
Chlor-alkali is in what management openly calls a historic trough. The stock reflects it: OLN trades around $24.50, down sharply from the $40s, sitting near the low end of its 52-week range of roughly $18 to $45.
But the numbers are turning. In Q1 2026, Olin posted sequential adjusted EBITDA improvement. Epoxy clawed back to roughly breakeven, helped by structurally lower costs at its Stade, Germany plant. Winchester sales jumped to $470 million from $388 million a year earlier on better demand and pricing. Management guided to substantial sequential earnings improvement in Q2, driven by higher chlor-alkali pricing and volumes, European epoxy cost cuts, and a commercial-ammunition recovery.
Behind that, the self-help story is real. The Beyond250 cost program targets $100–120 million of savings in 2026. The balance sheet has room — about $1.3 billion of liquidity, with amended credit facilities extending covenant flexibility into late 2027. And a long-term supply agreement with Chemours kicks in starting 2028.
The setup is the kind we like: a global cost leader near trough earnings, trading at a low multiple, with a cost-cutting lever in hand and a cyclical recovery as the free option. We don’t have to call the bottom. We just have to be willing to own the asset at a lower price than today’s — and get paid while we wait.
Value Investors That Already Own It
Christopher Bloomstran - Semper Augustus
Richard Pzena - Pzena Investment Management
Hotchkis & Wiley Capital Management
First Eagle Investment Management
Yacktman Asset Management
Why We Are Glad to Own It If Assigned
If OLN closes below $20 at expiration, we get assigned at an effective cost of about $19.18 — roughly 22% below today’s ~$24.50 and right around the bottom of the 52-week range. That’s near Olin’s book value of about $17.63 per share, and a low multiple on what the business earns once the cycle normalizes.
At that price we’d own the world’s largest chlor-alkali producer plus the Winchester franchise, bought at trough-cycle pricing, while collecting a dividend yielding north of 3% as we wait for the upcycle. Two good outcomes: keep the premium, or own a global cost leader at a discount.
What Could Go Wrong
This is a leveraged cyclical, and we own that risk going in.
The trough could run deeper or longer than expected. Caustic soda and ECU pricing may stay weak, and the housing and construction demand recovery management is counting on could slip. Debt-to-equity sits around 1.5, free cash flow is under pressure, and a prolonged trough would strain dividend coverage. Epoxy faces persistent low-cost Asian import competition. Winchester carries commodity-metals cost inflation and cyclical demand. Unplanned outages — like the Freeport disruption this year — can dent results in any given quarter. Trailing earnings are slightly negative, so the thesis leans on both the cycle turning and management executing its cost plan.
Bottom line: assignment means owning a commodity producer at the bottom of its cycle, not a steady compounder. That’s fine if it’s the exposure you want at this price — which is exactly why we set the strike where we did.
Go deeper — further reading
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A quick note before you act.
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