Why now is a good moment

Right before earnings, option prices tend to rise. This is because the market expects bigger moves, and that extra uncertainty is reflected in higher option premiums. This is known as implied volatility, and as a seller of options, you benefit from it.

We can estimate the expected move by looking at the prices of both the call and put options near the current share price—a method known as the straddle. Right now, the market expects Adobe to move about USD 30.5 in either direction, or ±8.8% by Friday. That suggests an expected range between USD 315 and USD 376.

The 320 put sits just above the lower edge of that range. Unless Adobe drops more than expected, there's a good chance the option expires without requiring you to buy the shares—and you keep the full premium.

What happens if the stock falls?

If Adobe closes below USD 320 at expiry, you may be assigned, which means you'll be required to buy 100 shares at that price. But remember, you already received USD 690, so your effective purchase price is USD 313.10.

If you were planning to buy Adobe anyway, this could be a better entry point. And once you own the shares, you can continue earning income by selling covered calls—another conservative strategy.

What are the risks?

No investment is risk-free. Here’s what to keep in mind:

• Earnings surprise: If results disappoint, Adobe could fall much more than expected.
• Assignment: You might end up buying the stock even if it drops sharply.
• Cash commitment: You must have enough funds to buy 100 shares if assigned—USD 32,000 in this case.

You can limit risk by only selling puts on stocks you’re comfortable owning, and by sizing your trades so that one assignment won’t overwhelm your portfolio.

Who is this for?

This strategy is designed for long-term investors who:

• Want to buy Adobe at a lower price
• Have the cash ready if needed
• Prefer to earn income while waiting
• Don’t want to speculate on the short-term earnings reaction

You don’t need to be a trader. This is a practical way to build a position in a stock you believe in, with less risk than buying outright.

Summary

• Adobe reports earnings on 11 September (after market)
• The stock has often dropped after earnings, even on good results
• Selling the 320 put brings in USD 690 in income
• You’ll either keep the cash or buy shares at an effective price of 313.10