Palo Alto Networks Growth Slows; Selling Puts Offers ~13% Annualized Yield
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This Yahoo Finance article by Trefis Team, published September 9, 2026, analyzes a put option selling strategy for Palo Alto Networks (PANW) stock. The strategy involves selling a put option expiring September 17, 2027, with a $240 strike price, collecting a premium of $2,128 per contract, yielding an annualized return of about 8.6% on the cash set aside, plus an additional ~3.9% from Treasury bills, for a total of ~12.6%. If PANW stays above $240, the seller keeps the premium; if it falls below, the seller buys shares at an effective cost of ~$218.73, a 35% discount to the current price of $336.98. The article examines whether the company is worth owning at that lower price, noting PANW's fiscal 2026 revenue of $11.5 billion (up 24%), but that growth was partly driven by acquisitions (CyberArk and Chronosphere). Management guides next-generation security ARR growth to slow to 22%-23% in fiscal 2027. The analysis concludes the trade is good only if the investor would be happy owning the shares at the lower price.
Source report
Trefis Team Wed, September 9, 2026 at 6:15 PM PDT | 5 min read
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Palo Alto Networks (PANW) has returned 71.4% over the past year and trades about 15% below its 52-week high. You can be paid now for agreeing to buy the shares well below today's price, and you keep that payment either way. The catch: the stock has to fall a long way first, and the slowdown management has already guided to is in the growth measures, not in the company total.
13% Annualized Yield at a 29% Margin of Safety, by Selling Put Options
- Sell a put option on PANW expiring 9/17/2027, with a strike price of $240.
- Collect roughly $2,128 in premium per contract (each contract covers 100 shares).
- That works out to about 8.6% annualized on the $24,000 of cash you set aside to secure the trade.
- Park that cash in Treasury bills or a Treasury money-market fund yielding roughly 3.9%, and your total yield climbs to about 12.6%.
- If PANW falls below $240, you buy it at $240, an effective entry near $218.73 a share after the premium, about a 35% discount to today's $336.98.
Win or Wait, You Still Pocket the Premium
If PANW stays above $240 through 9/17/2027, the put expires worthless, and you keep the full $2,128 premium. That is about 8.6% annualized on the $24,000 you set aside over 374 days, while that same collateral keeps earning the ~3.9% T-bill yield on top, for ~12.6% total. You never buy the stock, and you keep the income, free to do it again.
If PANW closes below $240, you are assigned and buy 100 shares at $240. The $2,128 premium you already pocketed lowers your effective cost to about $218.73 a share, roughly a 35% discount to today's price, though if the stock has fallen further by then, you would be holding a paper loss.
So everything depends on what you would be buying if PANW does fall that far.
Would You Want the Shares After a Fall That Big?
A lot is working here. Revenue reached $11.5 billion in fiscal 2026, up 24%, and the company took real share along the way:
- In SASE, it displaced legacy incumbents in nearly 100 accounts worth more than $400 million in total contract value, close to double the volume of displacements a year earlier.
- XSIAM, its security operations platform, ended fiscal 2026 above $700 million in ARR.
- Profitability has also cooled: net margin sits at 7.9%, versus a 17.9% three-year average.
But the headline growth rate was partly bought. Next-generation security ARR ended fiscal 2026 up 63%, with CyberArk and Chronosphere, the two largest acquisitions in the company's history, inside that figure. Management guides the same measure to 22% to 23% growth in fiscal 2027. Nothing has broken; the acquisitions simply stop being new.
Story Continues
Can Palo Alto Networks Grow Without Buying Growth?
The measure that comes closest to settling this is network and AI security, the largest platform by far. It brought in $8.35 billion of fiscal 2026 revenue and grew 17%, though about $85 million of that came with the CyberArk deal. Management guides it to low double digits in fiscal 2027, against 23% to 24% for the company as a whole. The acquired businesses carry the difference.
Management's answer is that AI keeps enlarging the surface it has to inspect:
- Agentic traffic across its SASE platform has surged nine-fold over the last nine months.
- Every new AI data center needs a firewall in front of it.
- Pulling the other way, memory and storage costs are climbing in the hardware business, about 10% of revenue, met so far with selective pricing actions.
Observability is where to watch whether the Chronosphere acquisition turns into growth. ARR there passed $500 million and more than doubled since that deal closed in fiscal Q2 2026. But a nine-figure share of fiscal Q4 2026 net new ARR came from one large LLM customer migrating off an incumbent vendor, and management expects that migration to tail off through fiscal Q1 2027.
So Is the Income Worth the Company You Might End Up With?
It is a good trade if you would hold the shares happily at the lower price, and a bad one if you would not. Most people never run that test, because the income arrives first.
Source
Yahoo FinanceWestern