🖼 ADOBE: DERIVATIVES TRADING 🖼

🖼 ADOBE: DERIVATIVES TRADING 🖼

Adobe Inc. operates as a technology company worldwide. Its Digital Media segment offers products and services that enable individuals, teams, and enterprises to create, publish, and promote content; Document Cloud, a cloud-based document services platform; and Creative Cloud, a subscription service that allows subscribers to use its creative products and applications (apps) integrated with cloud-delivered services across various surfaces and platforms. This segment serves photographers, video editors, graphic and experience designers, game developers, content creators, students, marketers, knowledge workers, and consumers.

Margins LTM [07/12/25]:

- Gross margin: ≈ 89.14%

- Operating margin: ≈ 36.58%

- EBITDA margin: ≈ 39.08%

- Net margin: ≈ 30.01%

- ROIC: ≈ 36.16%

Insights:

- P/S ratio close to ≈ 6.3x, where 6.3x is the lowest and 10x is the mean

- PER ratio of 21x, in line with a sensible multiple

- EV/EBITDA of 15.9x, slightly lower than the recent lows of 20x

- Stable growth in sales and strong margins

- EPS growth slightly upper than the last years

- Correlation with SP500 [VOO] of ≈ 51.7%, where their behaviour only could be explained by ≈ 26.7% in the last year [LTM]

- Beta with SP500 [VOO: Benchmark] of ≈ 1.46x

Based on its last EPS [07/12/25 TTM] of ≈ $16.09 USD and a 20 Forward PER and a sensibility of ± 0.3367x annual, a hypothetical spread could be (ceteris paribus):

- High: ≈ $ 430.17 USD

- Neutral: ≈ $ 321.80 USD

- Down: ≈ $ 213.42 USD

Hypothesis:

ADBE in the next 12 to 16 months, might have a strong distribution phase above ≈ $405 USD and a strong accumulation phase below ≈ $312 USD where there is a bearish bias due to its financial metrics and other quantitative parameters.

:::> It could be a more or less acceptable risk to take due to the possibility of a technical rebound that stabilizes the trend.

Hedge plan example:

- Call [sell]: $440 USD

- Call [buy]: $405 USD

- Put [sell]: $312 USD

- Put [sell]: $220 USD

Risks

- Prices higher than $440 for a long time

- Prices lower than $312 for a long time.

- The neutral price of ≈ $358 / $328 is not reached at expiration

- Roll over costs (if time is not well estimated)

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J. Joel Padilla

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