How to Buy the Dip in Synopsys Stock with a 2:1 Reward/Risk Ratio

Core Insights - A significant disparity in stock performance was observed, with Oracle (ORCL) gaining 36% while Synopsys (SNPS) experienced a 36% decline in a single day, marking a 70% difference in daily price movement for stocks exceeding $100 billion in market capitalization [1][2]. Company Performance - Synopsys was the 150th-largest stock in the S&P 500 Index prior to its drastic price drop, indicating its prominence in the market [2]. - The stock price of SNPS plummeted from over $600 to under $400 in one day, reflecting extreme volatility and market reaction [5]. Market Dynamics - The current market environment shows a trend where many stocks are reverting to price levels last seen in 2021 or 2022, with SNPS now part of this group [6]. - The volatility spike associated with SNPS's price drop enhances the attractiveness of collar trades, as higher volatility leads to increased option prices, potentially providing a substantial option premium [4]. Investment Strategy - A collar strategy for SNPS is proposed, with a reward-to-risk ratio of 2:1, utilizing strike prices of $480 for covered calls and $380 for protective puts, with a cost of 6% [7].