How to Get Paid to Buy IT at a Steep Discount
At about $247.34 a share, Gartner (IT) is trading about 55% below its 52W high.
Do you think IT stock is a good long-term bet at current levels? What about at a 30% discount at about $170 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
9.6% annualized yield at 30% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 12/18/2026, with a strike price of $170
- Collect roughly $950 in premium per contract (each contract represents 100 shares)
- That’s about 5.6% annualized yield on the $17,000 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 9.6%
- And you give yourself a chance to buy IT stock at deep discounted price of $170
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.
Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| IT stays above $170 | You keep the full $950 premium – 5.6% extra income over the next 367 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| IT closes below $170 | You’ll be obligated to buy 100 shares at $170. But thanks to $950 premium, your effective cost basis is just $160.5 per share – a roughly 35% 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.
First, you want fundamentals to check out. For details, see Buy or Sell IT Stock or check Gartner Investment Highlights
Second, you want to better understand competitive advantage and industry tailwinds. Below is what specifically gives us the conviction.
Why Hold IT Stock Long-Term
Gartner’s wide moat is demonstrated by its strong brand recognition and pricing power, with high customer retention even amidst price increases. The company is a leader in the growing IT advisory market, which is benefiting from the secular trend of digital transformation. Their business model is capital-light and generates significant free cash flow, allowing for shareholder returns through buybacks. These factors make it a compelling long-term holding.
Competitive Advantage
We classify IT’s economic moat as WIDE, with the primary source being Pricing Power
- Gartner reported a 106% wallet retention rate in Global Business Sales (GBS) in Q2 2024, indicating strong renewals and that existing customers are spending more.
- The company has been able to implement 3-4% price increases annually while maintaining high retention.
- High switching costs are evident as Gartner’s insights become embedded in clients’ strategic decision-making processes, making it difficult to replace.
- The Gartner brand, particularly tools like the Magic Quadrant, is often treated as the default standard in the IT industry, demonstrating significant mindshare.
Industry Tailwind
The industry tailwind is STRONG, with CAGR projection of 5.3% (Research and Markets)
Secular Trend: Digital Transformation
Key Risks: Regulatory changes, particularly around AI, and technological disruption are the primary risks.
Financial Guardrails
Cash Generation: Positive Free Cash Flow
Balance Sheet: As of Q3 2025, Gartner reported total debt of $2.75 billion. While the debt-to-equity ratio is high, it is well covered by operating cash flow. Bankruptcy risk is low given their strong cash flow generation.
Not comfortable with options or stock-specific trades? PORTFOLIOS are even better.
Portfolios Beat Stock Picking
Stocks soar and sink – the key is staying invested. A balanced portfolio keeps you in the market, boosts gains and reduces single stock risk
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.