F5 Networks, Inc. (FFIV), Netflix, Inc. (NFLX): This Company Is In The Sweet Spot Of 2 Huge Internet Trends

Given the expense of a single DDoS attack, the $32,000 price tag for a F5BIG-IP 5000 is a bargain.

Last week, F5 Networks, Inc. (NASDAQ:FFIV) announced earnings for the most recent quarter that beat analysts’ expectations. Revenue was up 5% from a year earlier, and, going forward, F5 Networks, Inc. (NASDAQ:FFIV) said it expects earnings per share to increase as much as 7% in the current quarter compared with a year ago.

FFIV is also one of the best managed companies in its industry, as you can see from this chart:

F5 Networks, Inc. (NASDAQ:FFIV) is performing significantly better than average in each of these measures and every other metric I checked. But instead of buying shares outright, I recommend readers sell a put and get paid to buy shares at a discount.

Specifically, I recommend selling FFIV Oct 70 Puts for around 65 cents. Selling these puts will generate immediate income of about $65 per contract. Assuming FFIV trades for $70 or more on Oct. 18, we keep the premium and make a profit of $65 on $1,400 (the “down payment” to initiate the trade). That’s a 4.6% return in 77 days. If we can repeat a similar trade every 77 days, we’d earn a 22.8% return on our capital in 12 months.

If FFIV trades for less than $70 on Oct. 18, you’ll keep the $65 per contract, but you’ll have to buy FFIV at $70 per share. In this case, you’ll own F5 Networks, Inc. (NASDAQ:FFIV) at a cost basis of $69.35 (the $70 “strike” minus the 65-cent premium, which you keep), a 21.1% discount to recent prices.

At $69.15, we’d own shares at about 13.6 times estimated 2014 earnings, and we’d be able to sell covered calls on the position to generate additional income.

(Note: Options aren’t for everyone. Please check with your broker about any special capital and paperwork requirements that you may need to fulfill.)

P.S. — Amber has an eye for seeing what others miss — and she’s uncovered a glitch in the options world that could be worth thousands of dollars per year to traders. To see here report, and what she’s uncovered, click here.

The article This Company Is In The Sweet Spot Of 2 Huge Internet Trends originally appeared on StreetAuthority.com and is written by Bob Bogda.

Bob Bogda does not personally hold positions in any securities mentioned in this article. StreetAuthority LLC does not hold positions in any securities mentioned in this article.