How To Create Income From Arista Networks Stock

Arista Networks (ANET) stock costs 63.2 times earnings, against 21.9 for the S&P 500. You can be paid now to agree to buy the shares at a much lower price. So how much income can you earn this way, and would you be glad to own Arista at that price?

Here is the income you get: about 4.7% a year on the cash you set aside, for agreeing to buy Arista Networks at $120, 40.8% below today's $202.86.

So how do you set up this trade? It is simple: sell a cash-secured put.

• Sell one put option on ANET expiring 9/17/2027, with a strike price of $120.
• Collect about $540 in premium per contract now (each contract covers 100 shares), at today's bid.
• Set aside $12,000 in cash per contract to cover the purchase. The premium is 4.5% of that over 352 days, about 4.7% a year.
• If Arista Networks stays above $120 through 9/17/2027, the put expires. You keep the premium and never buy the shares.
• If it closes below $120, you buy 100 shares at that price, about $114.60 each after the premium, 44% below today's price. The stock may have fallen further by then.
• The cash you set aside can also sit in Treasury bills at about 4.3% a year while it waits. That interest is yours with or without this trade, so it is not counted in the income above.

The Business You Would Own At The Strike

If you end up buying at the strike, you would own a business that is growing fast today. Arista's revenue in fiscal Q2 2026 was just over $3 billion, up 37.7% from a year earlier. That beat the guide management had given for the quarter. Revenue has not fallen in any of Arista's last three fiscal years.

Arista also keeps an unusually large share of each sale as profit. Its operating margin, the share of revenue left after running costs, was 43.1% over the past twelve months. The figure for the S&P 500 is 18.6%. Arista carries no debt. It ended fiscal Q2 2026 with about $13.3 billion in cash and securities.

Arista's shares have not become cheaper, though. The stock trades close to its 52-week high. Its price-to-earnings multiple is high against its own past 10 years. You would own the shares only after a large fall, so what counts is how long Arista's growth can last.

How Long Can Arista's Growth Last?

Management expects fast growth in fiscal 2026. On the fiscal Q2 2026 call, it raised its revenue outlook for fiscal 2026 for a third time, to about $12.6 billion. It would not break the latest $1.1 billion increase down by product line, saying all lines should contribute and the mix depends on what it can ship. For fiscal Q3 2026 alone, management guided to revenue of about $3.3 billion.

Management said the whole industry faces tight supply and rising component costs, and does not expect that to ease until 2028. Arista has responded by committing to buy far more parts. Its multiyear purchase commitments nearly tripled in a year, to about $9.7 billion at the end of fiscal Q2 2026.

Arista's sales also depend on a few very large buyers. Management expects one or maybe two customers to each account for 10% or more of revenue. Its two longest-standing partners are Microsoft and Meta.

The income is worth taking only if you would be glad to own Arista at the strike. For that, Arista needs its revenue to keep pace with its 2026 outlook even while supply stays tight. You will see the first sign of that when Arista reports fiscal Q3 2026 revenue against management's guide of about $3.3 billion.

Beyond ANET: A Systematic Way To Grow Your Money

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