How To Bank 10% On IBM Stock Before Buying A Single Share

Generate upfront income by selling put options on a tech giant below current market prices—keeping the premium regardless of whether the stock rises, moves sideways, or stays above your target price.

International Business Machines (IBM) has been on a solid run lately, but at $306 a share, it’s still trading below its recent peak. After a strong start to the year that saw revenue grow 6%, some investors are looking for a smarter way in than just buying at today’s price. One options trade offers exactly that, paying you to name your price well below the current market.

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10% annualized yield at a 30% margin of safety, by selling put options.

• Sell a put option on IBM expiring 6/17/2027, with a strike price of $210.
• Collect roughly $1,252 in premium per contract (each contract covers 100 shares).
• That works out to about 6.3% annualized on the $21,000 of cash you set aside to secure the trade.
• Park that cash in a money market or savings account earning roughly 4.0%, and your total yield climbs to about 10.3%.
• And if IBM falls below $210, you buy it at $210, an effective entry near $197.48 a share after the premium, about a 35% discount to today’s $306.13.

Two Primary Outcomes For This Strategy

If IBM stays above $210 through 6/17/2027, the put expires worthless, and you simply keep the full $1,252 premium. That is about 6.0% on the $21,000 you set aside over 345 days, cash that might otherwise earn you 4.0% or so. You never buy the stock and keep the income, free to do it again.

If IBM closes below $210, you are assigned to buy 100 shares at $210. The $1,252 premium you already pocketed lowers your effective cost to about $197.48 a share, roughly a 35% discount to today’s price, though if the stock has fallen further by then, you would be holding a paper loss.

So what happens if IBM really does close below $210, and you are the one buying? Then everything rests on a single question.

What You Would Actually Be Buying

The trade is straightforward, but it all comes down to one question: would you be happy to own this business if it got cheaper? The bull case for IBM starts with that strong first quarter, where not only did revenue climb, but free cash flow jumped 13%. The company’s high-value segments are firing on all cylinders. Software revenue grew 8%, and management is now confident enough to project growth of “10-plus percent” for the full year. The Infrastructure division did even better, growing 12% on the back of a “record Z quarter” for its mainframe business, which surged 48%. This is the picture of a company executing, with AI adoption acting as a clear tailwind for its core platforms.

But here’s the tension that could send the stock lower, and why this trade’s margin of safety is so appealing. Despite the strong quarter, management was careful to “maintain our guidance” for the year, a dose of prudence that had analysts on the earnings call asking if they were seeing “evidence of something slowing.” That caution hangs in the air. At the same time, the massive Consulting segment grew just 1%, acting as a drag on the faster-moving parts of the business. And while 8% software growth is solid, it was a sequential slowdown from the prior quarter’s 11% pace. For a closer look at what has been driving the stock’s recent performance, it is worth reviewing its recent winning streak.

This is the core of the decision. Are you looking at a disciplined management team navigating a complex market, or are the soft spots in Consulting and the slight software deceleration a sign of trouble ahead? This strategy offers upfront yield while you wait for the stock’s direction to clarify. If the stock stays high, you simply pocket the income. If it falls, you become an owner at a price you already decided was attractive. The one thing to watch is the Software segment. If its growth holds up or re-accelerates, the bull case gets a lot stronger. If it continues to slow, that management caution will look prescient.

Wondering whether another stock offers a better yield, or what this same trade would pay on a name you already like? You can screen the latest cash-secured put yields across the market for yourself. And if it is exposure to technology as a whole you want, rather than this one name, a technology ETF like XLK covers that single sector. Going broader than any one sector, to a quality-first mix across the whole market, is where the portfolio below comes in.

Getting Paid To Wait Still Leaves You Concentrated

Selling puts can pay you to buy a stock lower – but if that name is already an outsized part of your wealth, adding more is the opposite of what you need. Concentration is the real exposure, and cutting it back the usual way hands a slice to the IRS. There is a way to cap the downside and diversify out without the tax hit.