This position uses the Covered Calls Advisor's Dividend Capture Strategy since SAP has an upcoming annual (not quarterly) ex-dividend of $2.9291 per share on May 5th which is prior to the May 15th options expiration date. This is equivalent to an absolute annual dividend yield of 1.7% and an equivalent annualized dividend yield of an incredibly high 39.2% = [($2.9291/$170.65) x (365/16 days to expiration)]. This dividend is included in the return-on-investment calculations detailed below. Either an early assignment on May 4th (the last trading day prior to the ex-dividend date) or on the May 15th options expiration date would be desirable given the potential annualized return on investments for either outcome. Importantly to the Covered Calls Advisor, there is no quarterly earnings report prior to the options expiration date since the next earnings report on July 23rd, 2026 is more than two months after the May 15th options expiration date.
SAP SE ADR (SAP) -- New Covered Call Position
SAP, headquartered in Germany, is the world's dominant ERP (Enterprise Resource Planning) vendor, generating revenue through cloud subscriptions and software licenses as customers migrate from its legacy on-premise ECC system to S/4HANA Cloud — a transition that yields 2–3x more revenue per customer than the old model. Its competitive moat rests on extreme switching costs: replacing SAP once it's embedded in a company's core financial and supply chain operations is a multi-year, board-level undertaking that most organizations actively avoid. SAP projects cloud revenue of $30.2–30.7 billion for 2026, representing 23–25% year-over-year growth, with total cloud and software revenue forecast at $42.5–43.1 billion. SAP currently trades at a trailing P/E of roughly 23x with a forward P/E around 21x — with FY2026 EPS forecast at $8.35, up ~20% year-over-year. With a market cap of approximately $200 billion (down roughly 44% over the past year amid broader software sector pressure), SAP's valuation disconnect from its strong cloud fundamentals is a key debate among analysts, with the average price target implying significant upside if the S/4HANA migration wave executes as planned.
SAP SE ADR passed all 20 criteria in my "Balanced Growth" stock screener, which places it in the top 2% of the major U.S. companies considered in this stock screener. The average target price of the 10 analysts following SAP is $257.95 which is +51.2% above today's stock purchase price. The stock screener criteria and the actual numbers for SAP are shown in the filter breakdown in the table below:
As detailed below, two potential return-on-investment results are:
- +1.3% absolute return (equivalent to +81.4% annualized return-on-investment for the next 6 days) if the stock is assigned early (on the last business day prior to the May 5th ex-dividend date); or
- +3.2% absolute return (equivalent to +72.2% annualized return-on-investment over the next 16 days) if the stock is assigned on the May 15th, 2026 options expiration date.
As shown on the table at the bottom of this post, all nine criteria of my Dividend Capture Strategy are met with this position. Even if the SAP stock price declines somewhat during the next 16 days until the options expiration date, if the stock closes above the $162.50 strike price, then a very satisfactory annualized-return-on-investment of +72.2% will be achieved. The probability that this Call option will expire in-the-money on the options expiration date was 74.1% when this position was established.
The buy/write transaction was:
4/29/2026 Bought 100 SAP shares @ $170.654/29/2026 Sold 1 SAP 5/15/2026 $162.50 Call option @ $10.29 per share.
Note: Implied Volatility (IV) of the Call option was at 34.6 when this position was transacted which, as preferred, is above the current VIX of 18.9.
5/5/2026 Upcoming annual (not quarterly) ex-dividend of $2.9291 per share.
Two possible overall performance results (including commissions) for this SAP Covered Call position are as follows:
Covered Call Net Investment: $16,036.67
= ($170.65 - $10.29) * 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: +$1,029.67
= ($10.29 * 100 shares) - $.67 commission
(b) Dividend Income (If SAP Call option exercised early on May 4th, 2026, the last business day prior to the May 5th ex-div date): +$0.00; or
(b) Dividend Income (If SAP stock assigned at the May 15th, 2026 options expiration): +$292.91
= ($2.9291 dividend per share x 100 shares)
(c) Capital Appreciation (If SAP Call option assigned early on May 5th, 2026): -$815.00
+($162.50 strike price - $170.65 stock purchase price) * 100 shares; or(c) Capital Appreciation (If shares assigned at $162.50 strike price at the 5/15/2026 options expiration): -$815.00
+($162.50 - $170.65) * 100 shares
1. Total Net Profit [If option exercised early (business day prior to the May 5th ex-dividend date)]: +$214.67
= (+$1,029.67 option income + $0.00 dividend income - $815.00 capital appreciation); or
2. Total Net Profit (If SAP's shares assigned at $162.50 at the May 15th, 2026 expiration): +$507.58
= (+$1,029.67 option income + $292.91 dividend income - $815.00 capital appreciation)
1. Potential Absolute Return-on-Investment [If option exercised on business day prior to the 5/5/2026 ex-dividend date]: +1.3%
= +$214.67/$16,036.67
Potential Annualized Return (If option exercised early): +81.4%
= (+$214.67/$16,036.67) * (365/6 days); or
2. Potential Absolute Return-on-Investment (If SAP's shares assigned on the May 15th options expiration date): +3.2%
= +$507.58/$16,036.67
Potential Annualized Return (If SAP's shares assigned at the $162.50 strike price on the 5/15/2026 options expiration date): +72.2%
= (+$507.58/$16,036.67) * (365/16 days)
Either outcome provides a very attractive return-on-investment result for this SAP investment. These returns will be achieved as long as the stock is above the $162.50 strike price at assignment. However, if the stock declines below the strike price, the breakeven price of $157.4309 ($170.65 - $10.29 - $2.9291) provides 7.7% 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 Call position using the Covered Calls Advisor's Dividend Capture strategy. As shown below, all nine criteria are achieved for this SAP SE ADR Covered Call position.
