Three Standout Put Options to Consider Amidst Market Volatility

As the trading week draws to a close, the market has seen its fair share of turbulence. The S&P 500 reached a historical high earlier in the week only to stumble since, with a current decline of almost 0.75%. Adobe (ADBE) takes center stage in this market retreat, plummeting 14% today due to a tepid Q2 forecast. Despite surpassing earnings and revenue expectations, the digital giant’s AI endeavors, particularly in its creative customer base, fall short as reflected in its forecasted net new annual recurring revenue from the digital media segment. It’s a conundrum that investors will likely mull over this weekend.

Now, turning our attention away from Adobe’s woes, let’s explore three standout put options that could potentially offset some St. Paddy’s expenses this weekend.

Adobe

Venturing into Adobe’s unusual options activity from Thursday, intriguing patterns emerge. Notable put options with Vol/OI ratios exceeding 1.25 included strike prices at $500 and $575. With Adobe’s current share price hovering at just $488, yesterday’s options presented a mixed bag: the April 19 $575 put option was marginally profitable while the March 22 $500 faced a considerable challenge. The latter, despite offering a tempting 26% annualized yield, carries substantial risk given the current share price. However, Adobe’s innovative prowess and analyst favorability could hint at a buying opportunity amidst the recent downturn.

Bank of America analysts, as highlighted by CNBC, maintain a bullish stance on Adobe’s AI prospects, reiterating the company’s potential as a significant AI beneficiary despite a slower-than-expected monetization ramp. With the stock hitting an eight-month low, exploring call options in the upcoming weeks might prove fruitful.

Vertiv Holdings

Shifting gears to Vertiv Holdings (VRT), the stock garners commendation from analysts, boasting a Strong Buy consensus and a target price below its current valuation. While initial skepticism might arise concerning an overvalued stock, Vertiv’s product suite catering to critical infrastructure assets combined with a robust financial performance paints a compelling picture. The lone noteworthy put option from Thursday, the March 22 $67 strike, offers a tantalizing 31% annualized yield and reinforces confidence through a Strong Buy technical opinion.

MicroStrategy

Lastly, we delve into MicroStrategy (MSTR), renowned for its business intelligence solutions and voluminous Bitcoin investments. With an ever-expanding AI landscape, MicroStrategy’s unique blend of data analytics and cryptocurrency holdings positions it as a distinctive market player. The recent issuance of convertible notes and the CEO’s bold Bitcoin predictions underscore the company’s innovative trajectory. The March 22 $1,000 strike put option may evoke caution, tethered as it is to Bitcoin’s fluctuations, yet offers a respectable annualized yield of close to 16%.

As the market gyrates and uncertainty looms, these put options stand out as intriguing plays amidst the St. Paddy’s weekend festivities. Remember, wise investing is akin to catching a leprechaun – a blend of strategy, daring, and a bit of luck.

On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.