Exploring the Opportunity: Selling Puts on Palo Alto Networks, Inc. (PANW)

Understanding the Strategy of Selling Puts

Investors eyeing shares of Palo Alto Networks, Inc. (Symbol: PANW) may hesitate about the current market price of $388.32 per share. Selling puts can be an attractive alternative strategy. Notably, a December 2026 put option with a $270 strike price is available, currently offering a bid of $22.00. By selling this put, investors can collect a premium, which equates to an 8.2% return based on the $270 commitment, resulting in a 3.9% annualized yield, referred to as YieldBoost.

It’s important to note that selling a put does not grant access to potential profits from increasing share prices, unlike owning the stock. The put seller will only acquire shares if the contract is exercised, and this happens only when exercising the option at $270 becomes more favorable than selling the shares at the current market price. To clarify, if Palo Alto Networks, Inc. experiences a decline of 30.5%, the contract will be executed, leading to a cost basis of $248.00 per share before accounting for broker commissions (which accounts for collecting the $22.00 premium from the $270 strike). Consequently, the put seller’s only potential gain arises from the premium collected, equating to a 3.9% annualized return unless the stock falls significantly.

An Insight into Historical Performance

A chart detailing the trailing twelve-month performance of Palo Alto Networks, Inc. provides valuable context, as illustrated below. The green area on the chart indicates where the $270 strike lies in comparison to historical trends:

This chart, alongside the stock’s historical volatility, is essential for assessing whether the anticipated 3.9% annualized return from the December 2026 put option appropriately compensates for the risks involved. Based on the analysis of the last 251 trading days and the current price of $388.32, Palo Alto Networks, Inc. exhibits a trailing twelve-month volatility of 47%. For more details on various put options available and their corresponding expiration dates, visit the PANW Stock Options page on StockOptionsChannel.com.

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Also see:

• PE History
• MCO Next Dividend Date
• Top Ten Hedge Funds Holding SLXN

The views expressed in this article are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.