Established Covered Calls Position in IBM Corporation

Today a short-term Covered Calls position was established in IBM Corp. (ticker symbol IBM) when the Covered Calls Advisor's buy/write limit order was executed -- 200 shares were purchased at $231.90 and two May 15th, 2026 Call options were sold at $9.00 per share at the $225.00 strike price.  Therefore, a net debit price of $222.90 which is a time value of $2.10 per share [$9.00 Call options price - ($231.90 stock price - $225.00 strike price)].  This is a moderately in-the-money position since its probability of closing in-the-money on the 5/15 options expiration date was 69.2% when this position was established.  

Two potential return-on-investment results for this position are highlighted below and includes the possibility of early assignment since a quarterly ex-dividend of $1.69 per share (2.9% annualized dividend yield) goes ex-dividend this Friday (May 8th), which is prior to the May 15th options expiration date.  Either result would be attractive since they both substantially exceed my preferred minimum annualized return-on-investment criteria (see criteria #8 and #9 at the bottom of this post) when using my Dividend Capture Strategy.  Also, as I prefer, there is no intervening quarterly earnings report since IBM's next quarterly earnings report on July 22nd, 2026 is after this month's options expiration date.

IBM passed every criterion in my "Sustainable Competitive Advantage" stock screener, which places it in the top 2% of the 1,377 major U.S. companies considered in this stock screener.  The average target price of the 20 analysts following IBM is $294.90 which is +27.2% above today's stock purchase price.  The stock screener criteria and the actual numbers for IBM are shown in the filter breakdown in the table below:  

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

•  +0.9% absolute return (equivalent to +85.9% annualized return for the next 4 days) if the stock is assigned early (business day prior to the May 8th ex-dividend date); OR 

• +1.7% absolute return (equivalent to +56.4% annualized return over the next 11 days) if the stock is assigned on the May 15th, 2026 options expiration date.

IBM Corporation (IBM) -- New Covered Calls Position
The buy/write transaction was:
5/4/2026 Bought 200 IBM shares @ $231.90
5/4/2026 Sold 2 IBM 5/15/2026 $225.00 Call options @ $9.00.  The Implied Volatility of the Calls was 32.3 when this transaction occurred.
5/8/2026 Upcoming quarterly ex-dividend of $1.69 per share

Two possible overall performance results (including commissions) for this IBM Covered Calls position are as follows:
Covered Calls Net Investment: $44,581.34
= ($231.90 - $9.00) * 200 shares + $1.34 commission

Net Profit Components:
(a) Options Income: +$1,799.66
= ($9.00 * 200 shares) - $1.34 commission
(b) Dividend Income (If option exercised early on May 7th, the last business day prior to the May 8th ex-div date): +$0.00; or
(b) Dividend Income (If IBM stock assigned at the May 15th, 2026 options expiration date): +$338.00
= ($1.69 dividend per share x 200 shares)
(c) Capital Appreciation (If IBM Call options assigned early): -$1,380.00
+($225.00 strike price - $231.90 stock purchase price) * 200 shares; or
(c) Capital Appreciation (If shares assigned at $225.00 strike price at options expiration): -$1,380.00 = +($225.00 - $231.90) * 200 shares

1. Total Net Profit [If options exercised early]: +$419.66

= (+$1,799.66 options income +$0.00 dividend income -$1,380.00 capital appreciation); or

2. Total Net Profit (If IBM shares assigned at $225.00 at the May 15th expiration): +$757.66

= (+$1,799.66 options income +$338.00 dividend income -$1,380.00 capital appreciation)

1. Absolute Return-on-Investment [If option exercised early on May 7th (business day prior to the 5/8/2026 ex-dividend date)]: +0.9%

= +$419.66/$44,581.34

Annualized Return-on-Investment (If option exercised early): +85.9%

= (+$419.66/$44,581.34) * (365/4 days); or

2. Absolute Return-on-Investment (If IBM shares assigned at $225.00 at the May 15th, 2026 options expiration): +1.7%

= +$757.66/$44,581.34

Annualized Return-on-Investment (If IBM shares assigned at $225.00 at the May 15th options expiration date): +56.4%

= (+$757.66/$44,581.34) * (365/11 days)

At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy.  All nine criteria are achieved for this IBM Covered Calls position.