Synopsys Inc: Sell Puts for 4.9% Return at $430 Strike

Investors considering buying Synopsys Inc (SNPS) shares can use selling puts as an alternative strategy. Selling a January 2027 put at $430, with a bid of $21.20, represents a 4.9% return and a 3.5% annualized rate of return. This strategy does not give investors access to SNPS's upside potential, but can provide a higher return than buying shares at the current market price of $597.15.

Investors considering purchasing Synopsys Inc (SNPS) shares might find selling puts an attractive alternative strategy. This option allows investors to generate income while potentially benefiting from the stock's performance. By selling a January 2027 put option at a $430 strike price with a bid of $21.20, investors can earn a 4.9% return and an annualized rate of return of 3.5% [2].

The strategy involves collecting the premium for selling the put, which represents a 4.9% return on the $430 commitment. This is equivalent to a 3.5% annualized rate of return. However, selling a put does not give investors direct access to SNPS's upside potential. Instead, the put seller only ends up owning shares if the contract is exercised, which would happen if the stock price falls to $430 or below [2].

This strategy is particularly beneficial for investors who are tentative about buying SNPS shares at the current market price of $597.15. The put option provides a higher return than buying shares outright, making it an attractive option for risk-averse investors [2].

For those considering this strategy, it is essential to assess the stock's historical volatility and fundamentals. Synopsys Inc's trailing twelve-month volatility is 40%, indicating significant price fluctuations. Combining this with fundamental analysis can help investors determine if the put option's 3.5% annualized rate of return represents a good reward for the risks [2].

In summary, selling puts on Synopsys Inc offers an alternative investment strategy that can generate income and potentially benefit from the stock's performance. However, it is crucial to understand the risks and benefits associated with this strategy before proceeding.

References:
[1] https://www.nasdaq.com/articles/guru-fundamental-report-snps-4
[2] https://www.nasdaq.com/articles/agree-buy-synopsys-430-earn-49-using-options