The Smart Way to Own TER: Collect 12% Before You Even Buy
At about $359.77 a share, Teradyne (TER) is trading about 14% below its 52W high.
Do you think TER stock is a good long-term bet at current levels? What about at a 50% discount at about $180 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
12% annualized yield at 50% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 1/15/2027, with a strike price of $180
- Collect roughly $985 in premium per contract (each contract represents 100 shares)
- That’s about 8.0% annualized yield on the $18,000 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 12.0%
- And you give yourself a chance to buy TER stock at deep discounted price of $180
Possible Trade Outcomes: You Win Either Way
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| Stock Price Outcome | What It Means For You |
|---|---|
| TER stays above $180 | You keep the full $985 premium – 5.5% extra income over the next 252 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| TER closes below $180 | You’ll be obligated to buy 100 shares at $180. But thanks to $985 premium, your effective cost basis is just $170.15 per share – a roughly 53% discount from current level. |
But to hold this trade with conviction, you want to better under what’s going well for TER stock and how low it has fallen in the past.
Complementing Your Active Trades
Executing a cash-secured put on TER 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.