Exploring Put Options for Verint Systems Investors

Investors eyeing a purchase of Verint Systems Inc (Symbol: VRNT) may be hesitant due to the current market price of $17.06 per share. An alternative strategy worth considering is selling put options. Specifically, the September put option at the $15 strike could provide an interesting opportunity, currently bidding at $1.35. This premium equates to a 9% return on the $15 commitment, translating to a 22.1% annualized rate of return.

It’s important to note that selling a put option does not grant investors the upside potential of owning shares in Verint Systems. A put seller only acquires shares if the contract is exercised, which occurs when exercising the option yields a better result than selling at the market price. For the $15 strike option to be exercised, Verint’s shares would need to decline by 12.2%, resulting in a cost basis of $13.65 per share after accounting for the $1.35 premium collected. Thus, the primary benefit for the put seller is the premium, contributing to the impressive annualized return.

Below is a chart depicting the trailing twelve-month trading history for Verint Systems Inc, highlighting the position of the $15 strike relative to that history:

The above chart, when analyzed alongside Verint’s historical volatility, helps assess whether selling the September $15 put option for a 22.1% annual return is a worthwhile risk. Currently, the trailing twelve-month volatility for Verint Systems Inc is calculated at 53%, based on the last 250 trading day closing values and the present price of $17.06. Investors seeking additional put options with various expirations can explore the VRNT Stock Options page for more ideas.

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