Today a short-term Covered Call position in IBM Corporation (IBM) was established when one hundred shares were purchased at $217.68 and one July 24th, 2026 Call option was sold at $22.20 per share at the $200.00 strike price. The buy/write
net debit limit order at $195.48 was executed, so the time value was $4.52 per share [$22.20 Call option premium - ($217.68 stock purchase price -
$200.00 strike price)]. An in-the-money Covered Call position was established with a 71.0% probability of assignment on the options expiration date when this buy/write limit order was executed. IBM stock was down an intraday record of over 25% this morning after they pre-announced disappointing quarterly revenues and earnings. I took advantage of the upward spike in implied volatility to 81.7 in the 7/24 $200 Call option and established this IBM Covered Call position.
As detailed below, a potential return-on-investment result is +2.3%
absolute return-on-investment (equivalent to +84.3% annualized return-on-investment over the next 10 days) if the stock is assigned on the July 24th, 2026 options expiration date.
IBM Corporation (IBM) -- New Covered Call Position
The simultaneous buy/write transaction today was as follows:
7/14/2026 Bought 100 IBM Corp. shares @ $217.68
7/14/2026 Sold 1 IBM 7/24/2026 $200.00 Call option @ $22.20 per share
Note: the Implied Volatility of the Call was 81.7 when this transaction was executed. As I prefer, this value greatly exceeds that of the S&P 500 Volatility Index (VIX) which is currently at 16.3.
A possible overall performance result (including commission) for this IBM Covered Call position if assigned on the options expiration date is as follows:
Covered Call Cost Basis: $19,548.67
= ($217.68 - $22.20) * 100 shares + $.67 commission
Net Profit Components:
(a) Option Income: +$2,219.33
= ($22.20 * 100 shares) - $.67 commission
(b) Dividend Income $0.00
(c) Capital Appreciation (If IBM shares assigned at the $200.00 strike price on the options expiration date): -$1,768.00
+($200.00 strike price - $217.68 stock purchase price) * 100 shares
Total Net Profit (If IBM shares assigned at the $200.00 strike price at the 7/24/2026 expiration date): +$451.33
= (+$2,219.33 option income + $0.00 - $1,768.00 capital appreciation)
Absolute Return-on-Investment (If IBM shares assigned at the $200.00 strike price on the July 24th, 2026 options expiration date): +2.3%
= +$451.33/$19,548.67
Annualized Return-on-Investment (If IBM stock assigned at the $200.00 strike at the 7/24/2026 options expiration date): +84.3%
= (+$451.33/$19,548.67) * (365/10 days)
