Investors considering a purchase of Teradyne, Inc. (TER) shares, currently priced at $96.22, may find it beneficial to explore alternative strategies, such as selling puts. A notable option is the December 2027 put at the $80 strike, which has a current bid of $12.90, yielding a 16.1% return against the $80 commitment, or a 6.7% annualized rate of return.
The 6.7% annualized return from this put option surpasses Teradyne’s 0.5% annualized dividend yield by 6.2%. However, purchasing shares directly to collect dividends entails a higher risk, as the stock would need to decline by 16.99% to reach the $80 strike price. As of mid-afternoon trading on Monday, S&P 500 components exhibited a put volume of 1.95 million contracts and call volume of 2.44 million, leading to a put:call ratio of 0.80, which is significantly higher than the long-term median of 0.65.
