Interesting ZS Put And Call Options For January 2028

Options analysis for Zscaler (ZS) highlights strategies offering significant annualized "YieldBoost" returns, with the stock currently at $286.24. Selling a $280.00 put provides an 8.41% annualized return if it expires worthless (69% probability), effectively targeting a $224.65 acquisition cost. Conversely, a covered call using a $350.00 strike offers an 8.43% annualized return if it expires worthless (45% probability), or a 42.10% total return if ZS is called away by January 2028, presenting opportunities for income generation or discounted share acquisition.

Analysis

The analysis of Zscaler, Inc. (ZS) options, with the stock trading at $286.24, highlights two specific long-dated income-generating strategies expiring in January 2028. The first strategy involves selling a cash-secured put at the $280 strike. This presents a dual outcome: either acquiring ZS shares at an effective cost basis of $224.65 (a significant discount to the current price) if the stock is below $280 at expiration, or generating an 8.41% annualized return (YieldBoost) if the contract expires worthless, an event with a stated 69% probability. The second strategy is a covered call, selling the $350 strike against an existing long position. This offers an 8.43% annualized yield enhancement if the option expires worthless (a 45% probability), or a total return of 42.10% if the stock is called away at $350, capping upside beyond that price. Notably, the implied volatilities of the put (44%) and call (40%) are trading at a slight premium to the stock's trailing twelve-month historical volatility of 39%, suggesting that option premiums are relatively rich and supportive of these premium-selling strategies.

Key Decisions for Investors

• Investors bullish on ZS seeking a lower entry point could consider selling the January 2028 $280 put to either acquire the stock at an effective cost of $224.65 or generate an 8.41% annualized yield on the cash commitment.
• Current ZS shareholders aiming to enhance income could evaluate selling the January 2028 $350 covered call, which offers an 8.43% annualized yield boost while retaining capital appreciation potential up to the $350 strike price.
• Given that implied volatility (40-44%) is moderately elevated compared to historical volatility (39%), the environment is favorable for sellers of option premium, but investors must be comfortable with the long-term commitment and potential for stock price fluctuations until the 2028 expiration.