RTX (RTX) has climbed 33.4% over the past year, fueled by a robust defense and aerospace recovery, and currently trades around $191.78 per share.
The company recently delivered a strong quarter featuring 10% organic sales growth and raised its full-year outlook, supported by what management describes as a record backlog.
For shareholders who have already benefited from RTX’s climb, a covered call strategy offers a way to generate meaningful income starting immediately.
The trade involves selling one call option on RTX expiring June 17, 2027, with a strike price of $210, roughly 9.5% above today’s price, while holding 100 shares.
Executing this trade collects approximately $1,483 in premium per contract upfront, income that is kept regardless of what the stock does afterward.
That premium represents roughly 8.1% annualized income on the $19,178 worth of stock, earned simply for continuing to hold shares.
If RTX finishes above $210 at expiration, shares are called away at that price, but counting the premium, total return works out to approximately 17% to 18% annualized.
If RTX finishes below $210, the call expires worthless, the full $1,483 premium is retained, all shares remain in hand, and another call can then be sold.
The central trade-off is straightforward: shareholders give up any gains above $210, but pocket guaranteed income regardless of which direction the stock moves.
The bull case for RTX remains compelling, with a record $271 billion backlog and major defense agreements for systems including Tomahawk and AMRAAM locking in years of future demand.
Management has expressed enough confidence in this demand picture to raise both sales and earnings guidance for the current year.
However, analysts on the company’s latest earnings call raised concerns not about demand, but about the operational capacity to meet it at the required pace.
One analyst specifically questioned how concerned management was about the supply chain’s ability to keep up, and the company acknowledged that ramping production would require a “step change” from its suppliers.
Analysts also flagged the risk of slowing air travel growth, which could weigh on the high-margin commercial aftermarket business that contributes significantly to RTX’s profitability.
Management noted that material receipts at its Raytheon segment were up 13% in Q1, and sustaining that momentum is considered critical to converting the massive backlog into actual profit.
If operational hurdles slow the stock’s climb, selling a covered call for immediate income could prove a particularly sharp decision for long-term holders.
A covered call on RTX generates income from a single stock in a single sector, meaning both the premium opportunity and the downside risk remain concentrated in one company.
Broader portfolio durability typically comes from owning quality across multiple sectors, so no single name or theme disproportionately determines annual performance outcomes.
