For Apple shareholders, here’s a way to get paid a meaningful income now, which you keep no matter what, in exchange for agreeing to sell at a price above today’s if the stock keeps climbing.
After a run that has taken the stock near the top of its 52-week range, owners of Apple (AAPL) are sitting on handsome gains. The company just posted a record-breaking June quarter with revenue up 16% year over year, but for investors wondering what comes next, here is a trade that generates cash income on your shares today.
8.4% annualized income on AAPL shares you already own, with 11% of upside room, by selling a covered call.
- You own (or buy) 100 shares of AAPL near today’s price of $333.43.
- Sell one call option on AAPL expiring 6/17/2027, with a strike price of $370, about 11% above today.
- Collect roughly $2,460 in premium up front per contract (each contract covers 100 shares), which you keep no matter what the stock does.
- That premium is about 8.4% annualized on the $33,343 of stock, income you earn just for holding.
- If AAPL finishes above $370, your shares are called away at $370. Counting the premium, your total return works out to about 21% annualized, but you give up any gains above the strike.
Two Outcomes, You Keep The Income Either Way
If AAPL finishes below $370 on 6/17/2027, the call expires worthless, and you keep the full $2,460 premium and all your shares. That is about 7.4% over 322 days, income earned just for holding, and you are free to sell another call.
If AAPL finishes above $370, your 100 shares are called away at $370. You still keep the $2,460 premium, and counting it your total gain works out to about 18% over the holding period (about 21% annualized), a healthy exit. The cost of the trade is that any gain above $370 is no longer yours. And if the stock instead falls, you keep the premium but still ride the shares down, cushioned only slightly.
So the whole trade comes down to one thing: how much of that upside are you really likely to give up, and would you be content to sell at that higher price?
Would You Be Happy To Sell AAPL Higher?
Because this trade caps your upside, the decision hinges on how much more room you think Apple has to run. The bull case is straightforward: demand is simply on another level. Management stated that both the iPhone and Mac are doing remarkably better than they thought they would do, with iPhone revenue jumping 22% and Mac sales surging 29% in the latest quarter. Add to that what management calls “off the charts” excitement for the new Siri AI, and you have a powerful argument that the stock could keep climbing, making any upside cap a costly mistake. We recently took a closer look at the catalysts that could keep the stock moving in a separate piece.
On the other hand, the company is running into some very real walls. Management is warning of “very significant constraints” on supply that are expected to “increase significantly” in the coming quarter, a bottleneck that could throttle that incredible demand. At the same time, they see an “increasing impact” from soaring memory costs, which could squeeze profitability. This trade, then, is a bet that these operational pressures will create their own ceiling on the stock. You get paid now to accept a profitable exit at a higher price, a proposition that looks smarter if you believe the path to blowout growth is getting tougher from here. The one thing to watch is any update on those supply chain pressures.
See The Covered-Call Income On A Stock You Own
You may not own AAPL, but you almost certainly own something that could be paying you. Our Covered Call Finder lets you type in a stock, or a few, and instantly see the income a covered call could generate on each, then dial the strike up or down with a slider to balance more income against more upside. It is the quickest way to see what the names in your own portfolio could pay.
One step out from a single name: a technology ETF like XLK owns the whole technology group at once, so no single company can sink you. It still rises and falls with that one theme, which is exactly the gap the portfolio below closes.
One Name, One Theme, Or The Whole Market
There is a ladder here. A covered call earns income on one company. A sector fund spreads that across one theme. Neither escapes the risk that a single industry hits a rough patch. The next rung is a core built across every sector, so the whole thing never rides on one bet.
The Trefis High Quality (HQ) Portfolio is that rung: about 30 quality businesses across sectors, each weighed on the full sweep of its fundamentals, sized and rebalanced with discipline. It has a track record of outpacing a benchmark that combines three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. Use the call for income on names you like; let a diversified, cross-sector core carry the long game.
