Here is a way to collect and generate upfront income today from one of the market’s biggest names while establishing an opportunity to buy shares below current prices.
Alphabet (GOOGL) has been on a tear, rewarding shareholders with a stunning run over the past year, but the stock now trades about 14% below its 52-week high. For investors who see a technology titan but are wary of buying after such a big move, there is another way to play it. By selling a put option, you collect upfront premium in exchange for accepting the obligation to purchase the stock at a lower strike price if assigned.
8.8% annualized yield at a 30% margin of safety, by selling put options.
- Sell a put option on GOOGL expiring 6/17/2027, with a strike price of $245.
- Collect roughly $845 in premium per contract (each contract covers 100 shares).
- That works out to about 3.8% annualized on the $24,500 of cash you set aside to secure the trade.
- Park that cash in a money market or savings account earning roughly 5.0%, and your total yield climbs to about 8.8%.
- And if GOOGL falls below $245, you buy it at $245, an effective entry near $236.55 a share after the premium, about a 32% discount to today’s $346.77.
Two Outcomes, You Keep The Premium Either Way
If GOOGL stays above $245 through 6/17/2027, the put expires worthless and you simply keep the full $845 premium. That is about 3.4% on the $24,500 you set aside over 335 days, cash that might otherwise earn you 5.0% or so. You never buy the stock and keep the income, free to do it again.
If GOOGL closes below $245, you are assigned and buy 100 shares at $245. The $845 premium you already pocketed lowers your effective cost to about $236.55 a share, roughly a 32% discount to today’s price. However, if the stock drops significantly below your effective cost basis of $236.55, you will incur substantial unrealized losses.
So what happens if GOOGL really does close below $245, and you are the one buying? Then everything rests on a single question.
Would You Be Happy To Own GOOGL Down Here?
This trade hinges on one question: Would you be comfortable owning this business if you got it at a discount? The case for owning Alphabet is a story of staggering, AI-fueled growth. The company’s Google Cloud revenue recently accelerated, jumping 63% to top $20 billion for the first time in a quarter. That division’s backlog of committed deals nearly doubled sequentially to a massive $462 billion. This isn’t a distant promise; it’s happening now. The core Search business is also thriving, with revenues growing 19% in the latest quarter as management reports that user “queries are at an all-time high.”
Crucially, this growth is arriving with expanding profitability. Google Cloud’s operating margin widened to 33% from 17.8% a year prior, a powerful counter to the idea that the AI race is just a money pit. The company has even managed to reduce the “cost of core AI responses by more than 30%” through engineering and hardware improvements, suggesting a scalable model.
But there is a genuine risk here, and it is the very thing that could push the stock down to your entry point. The price of this growth is astronomical. The company plans to spend between $180 billion and $190 billion on capital expenditures in 2026 and expects its 2027 spending to “significantly increase” from there. This is an arms race, and the company is already stretched, admitting it is “compute constrained in the near term.” In fact, management stated that its “cloud revenue would have been higher if we were able to meet the demand.”
That is the tension in a nutshell. You have a business firing on all cylinders but spending unprecedented sums just to keep up. The question of whether the cloud business is now the main growth engine is a key one for investors. This trade pays you to wait while the market decides if that spending will generate the kind of returns that justify the cost. If you are comfortable owning a piece of that AI-driven machine at a lower price, the income is your reward for patience. The one number to watch is Google Cloud’s operating margin; its ability to keep expanding while capital expenditures ramp up is the clearest sign of whether this colossal bet is paying off.
Wondering whether another stock offers a better yield, or what this same trade would pay on a name you already like? You can screen the latest cash-secured put yields across the market for yourself. And if it is exposure to communication services as a whole you want rather than this one name, a communication services ETF like XLC covers that single sector. Going broader than any one sector, to a quality-first mix across the whole market, is where the portfolio below comes in.
Pair The Premium With Real Diversification
Getting paid to wait for a lower price on a stock you like is one of the more sensible trades around. It is still, by design, a concentrated position, and concentration is how hard-won gains get undone when a single name turns. The income is the upside; single-stock risk is the cost.
The Trefis High Quality (HQ) Portfolio handles that second half: about 30 quality, cash-generative companies, chosen on the full weight of their fundamentals rather than one premium-rich setup, then sized and re-balanced with care. The payoff is a track record of outpacing a benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. Keep the income from trades like this, without pinning your future to any single one.
