T - Selling Put Options On AT&T Could Produce Substantial Yields With Reduced Risk
2024-05-23 03:26:18 ET
Summary
- AT&T's financials continue to improve quarter after quarter, with stable revenue generation, improving operating income, and strong free cash flow conversion.
- The company is trading at a relative discount compared to its historical valuation, and we think fair value is somewhere between $20 and $24 per share.
- While buying and holding may appear enticing, selling put options offers a solid return on capital, a better margin of safety, and reduced risk for investors.
- We re-iterate our 'Buy' rating.
Last October, we wrote an article titled " AT&T: Pay Yourself 11% With This Bond-Like Exposure ".
In that piece, we talked about AT&T's ( T ) improving financial picture and attractive valuation, and highlighted a put option trade idea that yielded substantially more (on an annualized basis) than the stock's dividend at the time....
Selling Put Options On AT&T Could Produce Substantial Yields With Reduced Risk