Options strategies on Fortinet stock give investors ways to generate income, manage risk, or position for specific price moves depending on their outlook and risk tolerance. Whether you're bullish on FTNT and want to capture premium through covered calls, worried about downside and considering protective puts, or just trying to understand how volatility affects your options pricing, the mechanics matter more than the hype. Here's how to think through the most common approaches and what makes them work or fall apart.
Key takeaways
- Covered calls on FTNT let you collect premium by selling upside in exchange for income, but cap your gains if the stock rallies above your strike price
- Protective puts act as downside insurance, costing you premium upfront but limiting losses if Fortinet drops sharply
- Implied volatility (IV) directly affects option pricing—higher IV means more expensive options, which matters whether you're buying or selling
- Strike selection and expiration timing depend on your goals: income generation favors shorter expirations and closer strikes, while hedging often uses longer-dated, farther out-of-the-money contracts
- FTNT options trading works best when you understand the tradeoffs between premium collected, risk assumed, and opportunity cost
What are Fortinet options strategies and why use them?
Fortinet options strategies are specific approaches investors use to trade options contracts on FTNT stock, aiming to generate income, hedge risk, or speculate on price movements. Unlike buying shares outright, options give you leverage and flexibility—but they also come with expiration dates and more moving parts.
The two most common strategies for individual investors are covered calls and protective puts. Covered calls work when you already own FTNT shares and want to squeeze out extra income by selling someone else the right to buy your stock at a set price. Protective puts are the opposite: you pay a premium to buy the right to sell your shares at a floor price, which limits your downside if the stock tanks.
Beyond those two, there are spreads, straddles, and more complex multi-leg trades. But if you're starting out or just want practical tools for a stock you already own or plan to own, covered calls and protective puts are where most investors focus their attention. The FTNT stock page on Rallies can help you track the underlying fundamentals while you evaluate which options strategy fits your outlook.
How do covered calls work on FTNT?
A covered call means you own 100 shares of Fortinet and you sell one call option contract against those shares. The buyer of that call pays you a premium upfront and gets the right to buy your shares at the strike price before the expiration date. If FTNT stays below the strike, the option expires worthless, you keep the premium, and you still own your shares. If FTNT closes above the strike at expiration, your shares get called away at the strike price.
Covered call: An options strategy where you own shares of a stock and sell a call option against those shares to collect premium income. Your upside is capped at the strike price, but you keep the premium regardless of what happens.
The appeal is income. If you're okay with selling your FTNT shares at a certain price, you get paid to wait. For example, if FTNT trades at $70 and you sell a call with a $75 strike expiring in 30 days for $2 per share, you collect $200 in premium. If the stock stays below $75, you keep the premium and your shares. If it rallies to $80, you sell at $75 plus keep the $2 premium, for a total exit of $77—better than $70, but you miss the run to $80.
Strike selection depends on your goals. Selling calls closer to the current stock price (at-the-money or slightly out-of-the-money) generates more premium but increases the chance your shares get called away. Selling calls farther out-of-the-money reduces premium but gives you more room for the stock to appreciate before you lose your shares. Shorter expirations—weekly or monthly—let you collect premium more frequently, while longer expirations pay more upfront but tie up your shares longer.
One thing to watch: if FTNT has high implied volatility, your call premiums will be fatter, which makes covered calls more attractive. If IV is low, the premium you collect might not justify the risk of capping your upside. You can explore more about how stock analysis fits into options strategies on the stock analysis pillar page.
When do protective puts make sense for Fortinet?
Protective puts are straightforward: you own FTNT shares and you buy a put option to lock in a floor price. If the stock drops below the put's strike price, you can sell at the strike, limiting your loss. If the stock holds steady or goes up, the put expires worthless and you're out the premium you paid—but your shares appreciate.
Protective put: An options strategy where you own shares and buy a put option to establish a minimum sale price. It acts as insurance against downside moves, costing you premium upfront but capping potential losses.
The key question is whether the insurance cost is worth it. If FTNT trades at $70 and you buy a put with a $65 strike expiring in 60 days for $3 per share, you're paying $300 to protect 100 shares. That put guarantees you can sell at $65 no matter how low FTNT goes, so your maximum loss is $5 per share on the stock plus the $3 premium, or $8 total. Without the put, a drop to $55 would cost you $15 per share.
Protective puts make the most sense when you expect short-term volatility or a specific event that could hammer the stock—earnings, regulatory news, product cycle risk—but you don't want to sell your shares outright. They're less appealing when implied volatility is high, because put premiums get expensive fast. You're essentially paying more for insurance when the market already expects turbulence.
Investors often choose strike prices 5-10% below the current stock price to balance cost and protection. Closer strikes cost more but protect more of your downside. Farther strikes are cheaper but leave you exposed to bigger drops before the insurance kicks in. Expiration timing depends on how long you need the protection—earnings protection might only need 30 days, while general market hedging could justify 90 days or more.
How does implied volatility affect FTNT options?
Implied volatility measures how much the market expects a stock to move, expressed as an annualized percentage. Higher IV means bigger expected swings, which makes options more expensive. Lower IV signals calmer expectations and cheaper options. For both covered calls and protective puts, IV determines how much premium you collect or pay.
When FTNT's implied volatility is elevated—often around earnings, product launches, or cybersecurity industry news—call premiums fatten up, making covered calls more lucrative. You collect more income for the same strike and expiration. But protective puts also cost more, so hedging gets pricier. When IV is low, the opposite happens: covered calls generate less income, but protective puts become more affordable if you want downside protection.
Implied volatility (IV): The market's forecast of how much a stock's price is likely to move, derived from option prices. Higher IV means more expensive options, while lower IV means cheaper options.
You can compare FTNT's current IV to its historical range to get a sense of whether options are expensive or cheap relative to the stock's past behavior. If IV is in the top quartile of its historical range, selling premium through covered calls looks more attractive. If IV is near the bottom, buying puts for protection is relatively cheap. The Rallies AI Research Assistant can help you dig into volatility patterns and how they interact with your strategy.
What strike prices and expirations make sense for different goals?
Your strike and expiration choices should match what you're trying to accomplish. If your goal is steady income from covered calls, you want shorter expirations—weekly or monthly—and strikes slightly out-of-the-money, maybe 2-5% above the current stock price. This approach maximizes annualized premium collection and gives you frequent opportunities to reset your position as the stock moves.
If you're more interested in letting FTNT appreciate but still want some income, push the strike farther out-of-the-money—say 10-15% above the current price—and consider 60-90 day expirations. You'll collect less premium per contract, but you give your shares more room to run before they get called away, and the longer duration means fewer transaction costs over time.
For protective puts, the strike depends on how much loss you're willing to absorb. If you want tight protection and can't stomach more than a 5% drawdown, buy puts with strikes just 5% below the current price. If you're comfortable with a 10-15% drop and just want catastrophic protection, go farther out-of-the-money. The tradeoff is cost: closer protection is more expensive, farther protection is cheaper but leaves you exposed to bigger moves.
Expiration timing for puts depends on the risk window. Earnings protection might only need 30 days. Macro hedging during uncertain market conditions could justify 90 days or longer. Some investors roll puts forward as they approach expiration, effectively maintaining ongoing protection by buying a new contract and selling the old one before it expires.
What are the risks and tradeoffs with Fortinet covered calls?
The biggest risk with covered calls is opportunity cost. If FTNT surges past your strike price, you miss out on the upside above the strike. You're locked into selling at the strike, no matter how high the stock goes. For investors who believe in Fortinet's long-term growth, capping gains in exchange for modest premium can feel painful if the stock rips higher.
Another consideration is the tax treatment. If your shares get called away and you've held them less than a year, you'll trigger a short-term capital gain, taxed at your ordinary income rate. If you've held them longer, it's a long-term gain with more favorable rates. Either way, you're forced to realize the gain when the shares are called, which might not align with your tax planning.
There's also the re-entry problem. If your shares get called away and you want to buy back into FTNT, you might be paying a higher price than where you sold—especially if the stock kept climbing after your strike. You collected premium, but you gave up your position and now you're chasing the stock higher. Some investors avoid this by rolling the call up and out—buying back the original call and selling a new one at a higher strike and later expiration—but that eats into your premium and adds complexity.
Finally, covered calls don't protect you on the downside. If FTNT drops, the premium you collected cushions the loss slightly, but you still own the shares and absorb the decline. A $2 premium offers little comfort if the stock falls $10. Covered calls generate income, but they're not a hedge against falling prices.
What are the risks and tradeoffs with protective puts on FTNT?
The main drawback of protective puts is cost. You're paying premium for insurance that might expire worthless. If FTNT stays flat or rises, you lose the entire premium. Over time, continuously buying puts erodes your returns—similar to paying insurance premiums every month even if you never file a claim.
The cost is especially painful when implied volatility is high. Elevated IV inflates put premiums, making protection expensive right when you might want it most. It's like trying to buy hurricane insurance the day before a storm hits—the price reflects the heightened risk, and you pay a lot for coverage.
Another tradeoff is timing. If you buy a 30-day put and FTNT drops sharply after expiration, you're unprotected. If you buy a 90-day put and the stock rallies the whole time, you paid for insurance you didn't need. There's no perfect way to time protection, so you're always making a judgment call about risk windows.
Protective puts also create a psychological dynamic. You might hold onto a losing position longer than you otherwise would because you're protected by the put. Once the put expires, you're stuck with a loss and no hedge. Some investors roll puts indefinitely, but that compounds the cost and eats into long-term returns unless the stock experiences sharp drawdowns that justify the cumulative premium spent.
How do you decide between covered calls and protective puts?
Your choice depends on your outlook and risk tolerance. If you're neutral to slightly bullish on FTNT and want to generate income while you wait for appreciation, covered calls make sense. You're betting the stock won't surge past your strike, and you're okay capping gains in exchange for premium. This works well in sideways or modestly rising markets where implied volatility is elevated, fattening your call premiums.
If you're worried about downside risk—maybe you think earnings could disappoint, or the cybersecurity sector faces headwinds—but you don't want to sell your shares, protective puts fit better. You're paying for peace of mind and a defined maximum loss. This works when you have a specific risk event on the horizon and implied volatility is reasonable, keeping put costs manageable.
You can also combine both strategies. A collar involves selling a covered call to finance the purchase of a protective put, creating a range-bound position. You collect call premium to offset the cost of the put, which caps both your upside and your downside. Collars make sense when you want protection but don't want to pay out of pocket, and you're okay giving up upside in exchange for limiting downside.
For a deeper look at how options fit into broader portfolio decisions, check out the portfolio management resources that explore position sizing and risk allocation.
Try it yourself
Want to run this kind of analysis on your own? Copy any of these prompts and paste them into the Rallies AI Research Assistant:
- Walk me through options strategies for FTNT — specifically how covered calls would work, what strike prices and expirations make sense for different goals, and when protective puts might be worth considering based on the stock's volatility.
- What options strategies do investors commonly use on Fortinet? Walk me through covered calls and puts on FTNT.
- How does implied volatility on FTNT compare to its historical range, and what does that mean for covered call premiums and protective put costs right now?
Frequently asked questions
What is the best strike price for covered calls on FTNT?
The best strike depends on your goals. If you want maximum premium income, sell calls at-the-money or just slightly out-of-the-money, accepting that your shares will likely get called away if the stock rises even modestly. If you want to hold your shares longer and still collect income, choose strikes 10-15% above the current price, which reduces premium but gives FTNT more room to appreciate before assignment.
How much do protective puts cost on Fortinet?
Protective put costs vary based on strike price, expiration, and implied volatility. A put with a strike 5% below the current stock price and 30 days to expiration might cost 2-4% of the stock price in a normal volatility environment, but that can double or triple if IV spikes around earnings or sector turbulence. Farther out-of-the-money strikes and shorter expirations cost less, but offer less protection.
Can you lose money with FTNT covered calls?
Yes, covered calls don't protect your downside. If FTNT drops significantly, the premium you collected only partially offsets the loss on your shares. For example, if you collect $2 per share in premium and the stock falls $10, you still lose $8 per share. Covered calls generate income and reduce your cost basis slightly, but they're not a hedge against declining stock prices.
What does implied volatility tell you about FTNT options trading?
Implied volatility reflects the market's expectation of how much Fortinet's stock price will move. Higher IV means the market expects bigger swings, which makes options more expensive—good for sellers of covered calls who collect fatter premiums, but bad for buyers of protective puts who pay more for hedging. Lower IV signals calmer expectations and cheaper options, favoring put buyers over call sellers.
Should you use weekly or monthly expirations for Fortinet options strategies?
Weekly expirations work well for active traders who want to collect premium frequently and adjust their positions often, but they require more monitoring and incur more transaction costs. Monthly expirations offer a balance of decent premium and less frequent management. Longer expirations—60 to 90 days—suit investors who want to set a position and leave it alone, though premiums per day decay more slowly and you commit to the trade for a longer period.
What happens if FTNT stock gaps up or down through your strike price?
If FTNT gaps up through your covered call strike, your shares get called away at the strike price, and you miss any gains above that level. If the stock gaps down and you own a protective put, your put increases in value and offsets the loss on your shares, but only down to the put's strike price. Gaps don't change the mechanics—your contracts still settle based on the strike price you chose.
Can you combine covered calls and protective puts on the same FTNT position?
Yes, that's called a collar. You sell a covered call to collect premium and use that income to buy a protective put, creating a range where your maximum gain is the call strike and your maximum loss is the put strike. Collars are useful when you want downside protection without paying out of pocket, and you're willing to cap your upside. The tradeoff is reduced flexibility—you're locked into both sides of the trade until expiration.
Bottom line
Fortinet options strategies give you tools to manage risk, generate income, or position for specific moves, but they all come with tradeoffs. Covered calls cap your upside in exchange for premium, protective puts cost money upfront for downside insurance, and implied volatility drives the pricing on both. Strike selection, expiration timing, and your outlook on FTNT determine which approach makes sense for your situation.
Before diving into options, make sure you understand the underlying stock and how volatility affects pricing. For more on analyzing stocks and building strategies, explore the stock analysis resources that break down fundamentals and market dynamics.
Disclaimer: This article is for educational and informational purposes only. It does not constitute investment advice, financial advice, trading advice, or any other type of advice. Rallies.ai does not recommend that any security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results. Before making any investment decision, consult with a qualified financial advisor and conduct your own research.
Written by Gav Blaxberg, CEO of WOLF Financial and Co-Founder of Rallies.ai.
