Get Paid 16% To Wait For INTU Stock To Go On Sale

Bank an upfront income you keep unconditionally, plus the chance to buy the stock for less if its price tumbles.

Shares of financial software powerhouse Intuit (INTU) have had a rough year, trading more than 55% below their 52-week high as investors digest a mixed picture of booming growth engines and a sputtering core business. For an investor who sees value in the turmoil, this creates an opportunity to get paid for simply stating the price at which you would be a willing buyer. The trade below shows how to generate immediate income by agreeing to purchase shares at a significant discount to today’s price.

16% annualized yield at a 30% margin of safety, by selling put options.

• Sell a put option on INTU expiring 6/17/2027, with a strike price of $230.
• Collect roughly $2,080 in premium per contract (each contract covers 100 shares).
• That works out to about 10.7% annualized on the $23,000 of cash you set aside to secure the trade.
• Park that cash in a money market or savings account earning roughly 5.0%, and your total yield climbs to about 15.7%.
• And if INTU falls below $230, you buy it at $230, an effective entry near $209.20 a share after the premium, about a 37% discount to today’s $334.43.

Either Way, The Premium Is Yours To Keep

If INTU stays above $230 through 6/17/2027, the put expires worthless and you simply keep the full $2,080 premium. That is about 9.0% on the $23,000 you set aside over 311 days, while that same collateral keeps earning the 5.0% money-market yield on top, for the 15.7% total above. You never buy the stock and keep the income, free to do it again.

If INTU closes below $230, you are assigned and buy 100 shares at $230. The $2,080 premium you already pocketed lowers your effective cost to about $209.20 a share, roughly a 37% discount to today’s price, though if the stock has fallen further by then you would be holding a paper loss.

So what happens if INTU really does close below $230, and you are the one buying? Then everything rests on a single question.

Before You Sell That Put, Know What You Are Buying

So, if you end up owning the shares, what kind of business are you getting into? On one hand, Intuit is successfully shifting its center of gravity. Management points to its key growth areas, assisted tax, its money portfolio, and mid-market offerings, as expanding at a formidable clip, with all of them “growing north of 30%.” The star of this show is TurboTax Live, its service connecting filers with human experts. The company expects TurboTax Live revenue to grow 36% this year, and the service now accounts for 53% of total TurboTax revenue, a major push into the massive $37 billion assisted tax market.

But this growth story comes with a nagging subplot. The company’s original do-it-yourself tax business is hitting a wall, particularly with what it calls “the most price sensitive DIY filers.” The CEO admits the company “lost on price” in this segment and is “constructively dissatisfied” with the performance. This weakness is compounded by an overall tax market that is shrinking, with total IRS filers expected to decline by approximately 30-basis-points this season. Add to that the drag from its Mailchimp acquisition, where revenue was “down slightly versus a year ago,” and you have the core of the skeptics’ case.

The company isn’t standing still. It recently announced a plan to reduce its full time workforce by 17% to become a “faster, leaner and more focused company,” a move intended to bolster margins and deliver on its commitment to durable profit growth. The question for a potential owner is whether these new, fast-growing businesses can outrun the pricing pressure in the old one. For a deeper look at how another software giant has managed its margins, you can read about Oracle’s recent performance.

Ultimately, the decision to make this trade comes down to your view of that tension. You are paid upfront to take on the risk that the stock falls below your chosen price. The key thing to watch will be any sign that Intuit’s new strategy for its price-sensitive DIY tax segment is gaining traction. If it can stabilize its original business while the new growth engines keep firing, owning the stock at a discount might look very appealing.

Wondering whether another stock offers a better yield, or what this same trade would pay on a name you already like? You can screen the latest cash-secured put yields across the market for yourself. And if it is exposure to software as a whole you want rather than this one name, a software ETF like IGV covers that single sector. Going broader than any one sector, to a quality-first mix across the whole market, is where the portfolio below comes in.

Before You Commit To Buying More Of One Stock, Know How Much You Already Carry

A put sale is a promise to add to a single name, and the first thing a professional checks before that promise is existing exposure, because concentration is what turns an income trade into an oversized bet. That check is exactly what the Trefis Wealth team provides, with the same rules-based systematic discipline that runs our High Quality Portfolio. Request a free vulnerability audit of your biggest positions.