Fortinet Offers New Options with Strategic Investment Opportunities
Investors in Fortinet Inc (Symbol: FTNT) have new options available today, specifically for the expiration date of August 15th. With 128 days until expiration, these contracts could present a valuable opportunity for those looking to sell puts or calls to secure higher premiums than those offered by shorter-term options.
According to Stock Options Channel, our YieldBoost formula analyzed the FTNT options chain and identified a put and a call contract of particular interest. The put contract at the $87.50 strike price currently has a bid of $8.75. An investor who sells-to-open this put contract commits to buy shares at $87.50 while also collecting the premium. This results in a cost basis of $78.75 per share (excluding broker commissions), offering an alternative to purchasing shares at the current market price of $89.12.
This $87.50 strike price represents approximately a 2% discount compared to the current trading price, indicating it is out-of-the-money by that percentage. Currently, analytical data, including greeks and implied greeks, estimate a 61% chance that this put contract could expire worthless. Stock Options Channel will monitor these odds over time, publishing updates on our website detailing changes. If the contract expires worthless, the premium would yield a 10% return on the cash commitment, translating to an annualized return of 28.52%—referred to as the YieldBoost.
Below is a chart illustrating Fortinet Inc’s trailing twelve-month trading history, highlighting the location of the $87.50 strike in green:
Switching focus to the calls side of the options chain, the $92.50 strike call contract currently has a bid of $9.75. If an investor buys shares of FTNT at the present price of $89.12 and sells-to-open this call contract as a “covered call,” they commit to selling the shares at $92.50. Factoring in the premium received, this scenario could yield a total return of 14.73% if the stock is called away by the August 15th expiration (before broker commissions). However, there could be significant missed upside if FTNT shares increase substantially, emphasizing the importance of analyzing historical trading patterns and business fundamentals.
The chart below shows FTNT’s trailing twelve-month trading history, with the $92.50 strike highlighted in red:
The $92.50 strike price approximates a 4% premium over the current trading price, making it out-of-the-money by that percentage. Consequently, this covered call contract could also expire worthless, allowing the investor to retain both the shares and the premium collected. Current analytical estimations indicate a 46% chance of this outcome occurring. Stock Options Channel will continuously monitor and publish these odds over time alongside the trading history of the option contract. If the covered call expires worthless, it would add a 10.94% boost in total returns, or 31.20% annualized, which we call the YieldBoost.
Both the implied volatilities for the put and call contracts are approximately 53%. Additionally, our calculation of the actual trailing twelve-month volatility, based on the previous 251 trading days and today’s price of $89.12, stands at 38%. For more insights into put and call options worth exploring, visit StockOptionsChannel.com.
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Also See:
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- OSBC Average Annual Return
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
