How To Earn 13% Yield While Waiting to Buy APH 30% Cheaper
At about $123.62 a share, Amphenol (APH) is trading about 25% below its 52W high.
Do you think APH stock is a good long-term bet at current levels? What about at a 30% discount at about $85 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
13% annualized yield at 30% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 3/19/2027, with a strike price of $85
- Collect roughly $720 in premium per contract (each contract represents 100 shares)
- That’s about 8.7% annualized yield on the $8,500 you’re setting aside for the possibility of buying the stock
- This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 12.7%
- And you give yourself a chance to buy APH stock at deep discounted price of $85
However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.
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Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| APH stays above $85 | You keep the full $720 premium – 8.5% extra income over the next 357 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| APH closes below $85 | You’ll be obligated to buy 100 shares at $85. But thanks to $720 premium, your effective cost basis is just $77.8 per share – a roughly 37% discount from current level. |
But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.
Check out Buy or Sell APH Stock and Amphenol Investment Highlights
If you are not comfortable with options or stock-specific trades, Portfolios are the way to go as they can protect and grow wealth even better.
Portfolios Over Individual Stock Picks
Single stocks swing wildly but staying invested matters. A well built portfolio helps you stay invested, captures upside and softens the blows from individual stocks.
Why settle for average market returns? The Trefis High Quality (HQ) Portfolio invests in a diverse group of 30 stocks that have collectively delivered stronger upside with reduced volatility compared to the broader indices. Discover the methodology behind these smoother, higher returns by checking the HQ Portfolio performance data.