Sell International Business Machines 2027 $210 Puts for 10.8% Yield and 35% Discount
GOOG•An options trade selling IBM 6/17/2027 $210 puts nets $1,488 premium per contract, yielding about 10.8% annualized and a potential $195.13 breakeven entry price, 35% below current levels. IBM’s Q1 saw 6% revenue growth, a 13% free cash flow jump, 8% software and 12% infrastructure gains.
1. Options Trade Structure
The trade involves selling one IBM put option expiring 6/17/2027 with a $210 strike and collecting approximately $1,488 in premium per contract. Setting aside $21,000 of cash secures the obligation, generating about 6.8% annualized on that cash, which climbs to roughly 10.8% when combined with money market yields.
2. Potential Outcomes
If IBM remains above $210 at expiration, the put expires worthless and the full premium is kept, delivering a 7.1% return over 378 days. If IBM closes below $210, the seller buys 100 shares at that price, lowering the effective cost basis to $195.13 after premium, a 35% discount to today’s levels.
3. IBM’s Recent Financial Performance
In Q1, IBM reported 6% revenue growth and a 13% increase in free cash flow. Software revenue climbed 8% and infrastructure grew 12%, driven by a record mainframe quarter, and management now expects software segment growth of over 10% this year.
