IBM Put Sale Generates 10.8% Yield, Effective 35% Entry Discount
An options strategy on IBM offers an 11% annualized yield by selling 6/17/2027 $210 strike puts, collecting $1,488 premium per contract and boosting yield to 10.8% when cash is parked at 4% interest. IBM’s Q1 saw revenue rise 6%, free cash flow jump 13%, software revenue +8% and infrastructure +12%.
1. Options Trade Overview
IBM investors can sell one-year puts expiring 6/17/2027 with a $210 strike to collect roughly $1,488 in premium per contract, providing exposure to 100 shares at a predetermined price.
2. Yield Breakdown
The premium represents about 6.8% annualized on the $21,000 cash collateral required, while parking that cash at 4% in a money market account lifts the combined yield to approximately 10.8%.
3. Potential Outcomes
If IBM remains above $210 at expiration, the put expires worthless and the investor keeps the entire premium; if it closes below, shares are assigned at $210 for an effective cost basis near $195.13 after premium.
4. IBM Q1 Performance
In Q1, IBM delivered 6% revenue growth and a 13% increase in free cash flow, with software revenue up 8% and infrastructure up 12%, and it now expects software segment growth above 10% for the year.
