2 Tech Stocks to Buy Puts On Right Now

Front-month implied volatilities are low on FFIV and JNPR stock

Feb 26, 2018 at 1:55 PM
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It's been a volatile four weeks for the U.S. stock market. In recent sessions, the S&P 500 Index (SPX) has pared a portion of its February losses, but is comfortably on track to snap its 10-month losing streak. And though the S&P has averaged a March return of 0.6% since its inception, according to data from Schaeffer's Quantitative Analyst Chris Prybal, it's not time to press the buy button on just any name. In fact, tech shares F5 Networks, Inc. (NASDAQ:FFIV) and Juniper Networks, Inc. (NYSE:JNPR) have been two of the worst stocks to own in the third month of the year, looking back over the past decade.

worst spx stocks to own in march

F5 Networks Stock Has Cheap Options

Since 2008, F5 Networks stock has averaged a March loss of 1.18%, per data from Schaeffer's Senior Quantitative Analyst Rocky White -- and has finished the month positive less than half the time. This would mark a change of pace for the shares, which are pacing toward a February gain of 4.3%, and hit a record high of $150.83 earlier today.  More recently, the equity was seen trading up 2.3% at $150.65, bringing its year-to-date gain to 14.8%.

Those looking to bet on a repeat of history may want to consider buying FFIV puts. The stock's Schaeffer's Volatility Index (SVI) of 23% ranks in the 31st annual percentile, indicating low volatility expectations are being priced into short-term options -- a potential boon to premium buyers.

Juniper Networks Put Options Premiums Implode

Juniper Networks stock has struggled since a late-January bear gap sent it tumbling through short-term support near $27.61, a 38.2% Fibonacci retracement of its late-October through mid-November rally. And while the equity has come off its early February lows near $24.60, it ran out of steam near its 30-day moving average -- a trendline that served as a ceiling earlier this year.

JNPR shares are now down 7.6% year-to-date to trade at $26.32, and could be in for more losses if history is any guide. Going back 10 years, the security has shed 1.2%, on average, in March, and has finished the month positive just 40% of the time.

The stock's put options are attractively priced at the moment, too. While JNPR's SVI of 27% ranks in the 27th annual percentile, its 30-day implied volatility skew of negative 17.6% is docked in the 7th annual percentile -- meaning puts have rarely been cheaper than their call counterparts over the past year.


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