A “buy-write” strategy involves generating income through options trading, and TD Synnex (SNX) is identified as a strong candidate for this strategy due to its upcoming earnings report. Formed in 2021 from the merger of Tech Data and Synnex, TD Synnex acts as a distributor in the tech market, linking vendors and customers. The company benefits from rising demand in IT infrastructure, cloud services, and security solutions, particularly as companies transition to hybrid work models and invest in emerging technologies like AI and IoT.
Despite the favorable market conditions, SNX’s earnings growth has lagged behind the broader market, yielding just a 4.3% total return since the merger. Analysts forecast a turnaround, projecting 5.6% revenue growth and a 10% net income increase for fiscal 2025. Current trading at 9.5x forward earnings presents a significant discount compared to the S&P 500. Given the modest trading volumes for SNX options, investors should exercise patience. The recommended buy-write involves purchasing 100 shares and selling a $130 call with a premium that could yield attractive returns. Investors should consider strike prices and expiration times wisely to maximize their potential upside while lowering risk.
