Covered Call Position Established in RTX Corporation

Today a Covered Call position was established in RTX Corporation (ticker symbol RTX). In early 2020, Raytheon merged with United Technologies (after they spun-out their Carrier and Otis Elevators divisions) making the new Raytheon a very strong company with approximately equal parts defense and commercial business revenues.  Two years ago, they changed their corporate name to RTX Corporation. 

My buy/write limit order was executed when 100 shares were purchased at $156.04 and 1 August 22nd, 2025 weekly Call option was sold at $4.72 per share at the $152.50 strike price.  The time value (aka extrinsic value) in the Call option was $1.18 per share [$4.72 Call option premium - ($156.04 stock price - $152.50 strike price)] when this transaction executed.  There is also an upcoming ex-dividend of $.68 per share (7.9% above last year's dividend rate for the same quarter) on August 15th, 2025.  Two potential return-on-investment results for this position are detailed below and include the possibility of early exercise since the ex-dividend is prior to the August 22nd, 2025 options expiration date.  Given my current Overall Market Meter outlook of Neutral, a conservative in-the-money Covered Call position was established, the probability that the Call will remain in-the-money on the options expiration date was 72.2%.  Important to the Covered Calls Advisor, RTX reported their Q2 2025 earnings report two weeks ago, so there is no intervening earnings report prior to the August 22nd options expiration date.  

As detailed below, two potential return-on-investment results are: 

•  +0.8% absolute return (equivalent to +28.2% annualized return-on-investment for the next 10 days) if the stock is assigned early (on the last business day prior to the August 15th ex-dividend date); OR 

• +1.2% absolute return (equivalent to +26.2% annualized return-on-investment over the next 17 days) if the stock is assigned on the August 22nd options expiration date.

RTX Corporation (RTX) -- New Covered Call Position

The buy/write transaction was:
8/5/2025 Bought 200 RTX shares @ $72.40
02/17/2021 Sold 1 RTX 8/22/2025 $152.50 Call option @ $4.72 per share
8/15/2025 Upcoming quarterly ex-dividend of $.68 per share

Two possible overall performance results (including commissions) for this RTX Corp. Covered Call position are as follows:
RTX Covered Call Cost Basis: $15,132.67
= ($156.04 - $4.72) * 100 shares + $.67 commission

Net Profit Components:
(a) Options Income: +$472.00
= ($4.72 * 100 shares)
(b) Dividend Income (If option exercised early on August 14th, 2025, the business day prior to the August 15th ex-div date): +$0.00; or
(b) Dividend Income (If RTX stock assigned at August 22nd, 2025 options expiration): +$68.00
= ($.68 dividend per share x 100 shares)
(c) Capital Appreciation (If RTX Call option assigned early on August 14th): -$354.00
+($152.50 strike price - $156.04 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $152.50 strike price at options expiration): -$354.00
+($152.50 - $156.04) * 100 shares

1. Total Net Profit [If option exercised on Aug. 14th (business day prior to Aug. 15th ex-dividend date)]: +$118.00

= (+$472.00 options income + $0.00 dividend income - $354.00 capital appreciation); or

2. Total Net Profit (If RTX shares assigned at $152.50 strike price at the August 22nd, 2025 options expiration date): +$186.00

= (+$472.00 + $68.00 - $354.00)

1. Absolute Return (If option exercised early): +0.8%

= +$118.00/$15,132.67

Annualized Return-on-Investment (If option exercised early): +28.5%

= (+$118.00/$15,132.67) * (365/10 days); or

2. Absolute Return (If RTX shares assigned at the $152.50 strike price at the Aug. 22nd, 2025 options expiration date): +1.2%

= +$186.00/$15,132.67

Annualized Return-on-Investment (If RTX shares assigned at the $152.50 at the August 22nd, 2025 options expiration date): +26.4%

= (+$186.00/$15,132.67) x (365/17 days)

These return-on-investment results will be achieved as long as the stock is above the $152.50 strike price at assignment.  If the stock declines below the strike price, the breakeven price of $150.64 ($156.04 - $4.72 - $.68) provides 3.5% downside protection below today's stock purchase price.

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet must be 'YES' prior to establishing a position.  As shown below with this RTX Corporation position, eight of the nine criteria were met.