Get Paid 8.3% to Buy SPGI at a 30% Discount – Here’s How
At about $410.40 a share, S&P Global (SPGI) is trading about 27% below its 52W high.
Do you think SPGI stock is a good long-term bet at current levels? What about at a 30% discount at about $290 per share? If you think that is a steal and have some cash ready to go, here is a trade.
8.3% 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 $290
- Collect roughly $790 in premium per contract (each contract represents 100 shares)
- That’s about 3.3% annualized yield on the $29,000 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 5.0%, taking total yield to 8.3%
- And you give yourself a chance to buy SPGI stock at deep discounted price of $290
Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| SPGI stays above $290 | You keep the full $790 premium – 2.7% extra income over the next 304 days on cash that might otherwise earn you 5.0% or less. You never buy the stock and simply walk away with the cash. |
| SPGI closes below $290 | You’ll be obligated to buy 100 shares at $290. But thanks to $790 premium, your effective cost basis is just $282.1 per share – a roughly 31% discount from current level. |
But to hold this trade with conviction, you want to better understand what’s going well for SPGI stock and how low it has fallen in the past.
Complementing Your Active Trades
Executing a cash-secured put on SPGI is a highly efficient way to engineer yield and optimize your entry point. It is a sophisticated play for active investors. But sustainable wealth building also requires a passive, structured engine.
For investors looking to complement their active trades with a hands-off compounding vehicle, the Trefis High Quality (HQ) Portfolio is the solution. It is engineered to capture market upside across 30 high-conviction stocks and has delivered over 105% in cumulative return since inception.