- RTX -0.59%
Defense stocks like RTX Corp (RTX), parent of Raytheon, Collins, and Pratt & Whitney, look attractive to value buyers. Short sellers are selling out-of-the-money RTX puts and calls, as they have high premiums.
RTX is at $208.21 in midday trading on Monday, March 9, 2026. That's up from $195.98 on Feb. 25, a trough just before the Iran war started. As a result, its option premiums have risen, especially for one-month expiries. That makes them worth shorting.
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RTX stock - last 3 months - Barchart - Monday, March 9, 2026 For example, look at the April 10, 2026, expiry period. It shows you can earn about 2% shorting puts and calls for strike prices 5-6% out-of-the-money (OTM).
Shorting OTM RTX Calls
Here is what I mean. The $220.00 strike price call option contract for April 10 has a midpoint premium of $4.18. Here is how you calculate the covered call yield:
$418 / $20,928 = 0.1997 = 2.0% 1 month yield
RTX call expiring April 10 - Barchart - Monday, March 9, 2026 In other words, if you buy 100 RTX shares at $208.84, you can “Sell to Open” 1 call option contract at $220.00 and immediately receive $418.00 in your account. That works out to a one-money 2.0% yield.
Moreover, if RTX stock rises to $220, the investor keeps the capital gain. So, it's possible to make another 5.1%, for a total return of 7.1% over the next month.
In addition, more risk-averse investors can sell short the $225.00 strike price call. That yield works out to about 1.5% (i.e., $3.09/$209.29 = 0.01476).
This contract has a lower delta ratio (25%) and may, based on volatility patterns, not require the investor to sell their shares (if RTX stays below $225). After all, the strike price is 7.5% higher.
Moreover, on average, if an investor were to short both contracts, results, in an OTM play that is 6.3% higher on average than today's price. The average yield is 1.75%.
Another way to play this is to sell short out-of-the-money puts. That way, an investor does not have to sell any RTX shares and still collect income.
Shorting OTM RTX Puts
For example, the April 10 expiry period shows that the $195.00 put option contract, which is 6.8% lower than today's price (i.e., it's out-of-the-money or OTM), has a $3.47 put midpoint premium.
That means a short seller who secures $19,500 with the brokerage firm (i.e., 100 x $195.00 strike price), can collect $347.00 in their account. This works out to a 1.8% one-month yield:
Story Continues$347/$19,500 = 0.01779 = 1.78% for one month
RTX puts expiring April 10 - Barchart - March 9, 2026 That means that as long as RTX stock remains above $195.00, an investor's collateral won't be assigned to buy 100 shares at $195.00.
However, even if that occurs, the breakeven is much lower:
$195.00 - $3.47 = $191.53 B/E
That is 8.48% lower than today's price. Moreover, this has a similar 25% chance of occurring, based on the delta ratio in the table above.
This is a great way for an investor to set a lower buy-in point into RTX and also gain income.
The bottom line is that shorting out-of-the-money puts and calls in RTX stock in one-month periods is a very attractive way to make money.
On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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