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. Three years ago, they changed their corporate name to RTX Corporation.
RTX Corporation is an aerospace and defense company, which provides advanced systems and services for commercial, military, and government
customers worldwide. The Company operates through three segments: Collins Aerospace, Pratt & Whitney, and Raytheon. Collins Aerospace segment
provides technologically advanced aerospace and defense products and aftermarket service solutions for civil and military aircraft manufacturers,
commercial airlines, and regional, business and general aviation, as well as for defense and commercial space operations. The Pratt & Whitney
segment supplies aircraft engines for commercial, military, business jet, and general aviation customers. The Raytheon segment provides defensive
and offensive threat detection, tracking and mitigation capabilities for the United States and foreign government and commercial customers by designing, developing, and providing advanced capabilities in integrated air and missile defense, smart weapons, and missiles.
My net debit buy/write limit order was executed when 100 shares were purchased at $198.01 and 1 February 27th, 2026 weekly Call option was sold at $6.37 per share at the $195.00 strike price. The time value (aka extrinsic value) in the Call option was $3.36 per share [$6.37 Call option premium - ($198.01 stock price - $195.00 strike price)] when this transaction executed. There is also an upcoming ex-dividend on Feb. 20th at $.68 per share (7.9% above last year's dividend rate for the same quarter). 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 February 27th, 2026 options expiration date. Given my current Overall Market Meter outlook of Neutral, a slightly in-the-money Covered Call position was established and the probability that the Call will remain in-the-money on the options expiration date was 58.8% when this transaction occurred. 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 February 27th options expiration date.
As detailed below, two potential return-on-investment results are:
- +1.7% absolute return (equivalent to +58.1% annualized
return-on-investment for the next 11 days) if the stock is assigned early (on the last business day
prior to the February 20th ex-dividend date); OR
- +2.1%
absolute return (equivalent to +42.7% annualized return-on-investment over the next 18 days) if the stock is assigned on the February 27th options expiration date.
RTX Corporation (RTX) -- New Covered Call PositionThe buy/write transaction was:
2/9/2026 Bought 100 RTX shares @ $198.01
2/9/2026 Sold 1 RTX 2/27/2026 $195.00 Call option @ $6.37 per share
2/20/2026 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: $19,164.67
= ($198.01 - $6.37) * 100 shares + $.67 commission
Net Profit Components:
(a) Options Income: +$636.33
= ($6.37 * 100 shares) - $.67 option income
(b) Dividend Income (If option exercised early on Feb. 19th, 2026, the last trading day prior to the February 20th ex-div date): +$0.00;
or
(b) Dividend Income (If RTX stock assigned on the February 27th, 2026 options expiration date): +$68.00
= ($.68 dividend per share x 100 shares)
(c) Capital Appreciation (If RTX Call option assigned early on Feb. 19th): -$301.00
+($195.00 strike price - $198.01 stock purchase price) * 100 shares;
or
(c) Capital Appreciation (If shares assigned at $195.00 strike price at options expiration): -$301.00
+($195.00 - $198.01) * 100 shares
1. Total Net Profit [If option exercised on Feb. 19th (last business day prior to the Feb. 20th ex-dividend date)]: +$335.33
= (+$636.33 options income + $0.00 dividend income - $301.00 capital appreciation); or
2. Total Net Profit (If RTX shares assigned at $195.00 strike price at the Feb. 27th, 2026 options expiration date): +$403.33
= (+$636.33 + $68.00 - $301.00)
1. Absolute Return (If option exercised early): +1.7%
= +$335.33/$19,164.67
Annualized Return-on-Investment (If option exercised early): +58.1%
= (+$335.33/$19,164.67) * (365/11 days); or
2. Absolute Return (If RTX shares assigned at the $195.00 strike price at the Feb. 27th, 2026 options expiration date): +2.1%
= +$403.33/$19,164.67
Annualized Return-on-Investment (If RTX shares assigned at the $195.00 at the 2/27/2026 options expiration date): +42.7%
= (+$403.33/$19,164.67) x (365/18 days)
These return-on-investment results will be achieved as long as the stock is
above the $195.00 strike price on the options expiration date. If the stock declines
below the strike price, the breakeven price of $190.96 ($198.01 stock purchase price - $6.37 option income - $.68 dividend income)
provides 3.6% 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, all nine criteria were met.
