NetApp appeared today on my Free Cash Flow Growers stock screener. Analysts' average target price is $123.23 (+11.3% above today's purchase price). Also, CFRA and LSEG Stock Reports Plus both have Buy ratings; and LSEG has NetApp at a 9 for both their Average Rating and their Optimized Rating (on a scale of 1 to 10).
As detailed below, two potential return-on-investment results are:
- +1.4% absolute return (equivalent to +31.4% annualized return-on-investment for the next 16 days) if the stock is assigned early (last trading day prior to the January 2nd, 2026 ex-dividend date); OR
- +1.9% absolute return (equivalent to +29.7% annualized return-on-investment over the next 23 days) if the stock is assigned on the January 9th, 2026 options expiration date.
The simultaneous net debit buy/write transaction was:
12/17/2025 Bought 100 NetApp Inc. shares @ $110.74.
12/17/2025 Sold 1 NetApp 1/9/2026 $107.00 Call option @ $5.20 per share.
Note: the Implied Volatility of this Call option was 26.3 when this position was established.
1/2/2026 Upcoming quarterly ex-dividend of $.52 per share.
Two possible overall performance results (including commissions) for this NetApp Inc. Covered Call position is as follows:
Covered Calls Cost Basis: $10,554.67
= ($110.74 - $5.20) * 100 shares + $.67 commission
Net Profit Components:
(a) Options Income: +$519.33
= ($5.20 * 100 shares) - $.67 commission
(b) Dividend Income (If options exercised early on Dec. 31st, 2025, the last business day prior to the January 2nd, 2026 ex-div date): +$0.00; or
(b) Dividend Income (If NetApp stock assigned on the January 9th, 2026 options expiration -- so the dividend is captured): +$52.00
= ($.52 dividend per share x 100 shares)
Either outcome provides a satisfactory return-on-investment result for this NetApp Inc. Covered Call investment. These returns will be achieved as long as the stock is above the $107.00 strike price at assignment. However, if the stock declines below the strike price, the breakeven price of $105.02 = ($110.74 stock price - $5.20 Call option price - $.52 dividend) provides 5.2% 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 (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy. As shown in the chart below, all nine criteria are achieved for this NetApp Inc. Covered Call position.
Net Profit Components:
(a) Options Income: +$519.33
= ($5.20 * 100 shares) - $.67 commission
(b) Dividend Income (If options exercised early on Dec. 31st, 2025, the last business day prior to the January 2nd, 2026 ex-div date): +$0.00; or
(b) Dividend Income (If NetApp stock assigned on the January 9th, 2026 options expiration -- so the dividend is captured): +$52.00
= ($.52 dividend per share x 100 shares)
(c) Capital Appreciation (If NetApp Call option assigned early on January 2nd, 2026): -$374.00
+($107.00 strike price - $110.74 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $107.00 strike price at options expiration): -$374.00
+($107.00 - $110.74) * 100 shares
+($107.00 strike price - $110.74 stock purchase price) * 100 shares; or
(c) Capital Appreciation (If shares assigned at $107.00 strike price at options expiration): -$374.00
+($107.00 - $110.74) * 100 shares
1. Total Net Profit (If options exercised early): +$145.33
= (+$519.33 option income + $0.00 dividend income - $374.00 capital appreciation); or
2. Total Net Profit (If NTAP shares assigned at $107.00 on the Jan. 9th, 2026 expiration date): +$197.33
= (+$519.33 option income + $52.00 dividend income - $374.00 capital appreciation)
1. Absolute Return-on-Investment [If option exercised on business day prior to the Jan. 2nd, 2026 ex-dividend date]: +1.4%
= +$145.33/$10,554.67
Annualized Return-on-Investment (If option exercised early): +31.4%
= (+$145.33/$10,554.67) * (365/16 days); or
2. Absolute Return-on-Investment (If NetApp shares assigned on the January 9th, 2026 options expiration date): +1.9%
= +$197.33/$10,554.67
Annualized Return-on-Investment (If NetApp shares assigned at $107.00 at the January 9th, 2026 options expiration date): +29.7%
= (+$197.33/$10,554.67) * (365/23 days)
Either outcome provides a satisfactory return-on-investment result for this NetApp Inc. Covered Call investment. These returns will be achieved as long as the stock is above the $107.00 strike price at assignment. However, if the stock declines below the strike price, the breakeven price of $105.02 = ($110.74 stock price - $5.20 Call option price - $.52 dividend) provides 5.2% 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 (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy. As shown in the chart below, all nine criteria are achieved for this NetApp Inc. Covered Call position.
