An 8.8% Income On LMT Stock, For Giving Up Gains Above 9.4%

For Lockheed Martin shareholders, here is a trade that pays you a real income today, which you keep no matter what, in exchange for agreeing to sell your stock at a higher price if it gets there.

Lockheed Martin (LMT) is sitting on a mountain of orders, with a backlog that just hit an all-time high of $230 billion and sales growth accelerating. Yet the stock itself trades about 10% below its 52-week high, suggesting the market isn’t quite ready to price in a blue-sky scenario. For an investor who already owns the shares, that tension creates an opportunity to get paid for patience.

8.8% annualized income on LMT shares you already own, with 9.4% of upside room, by selling a covered call.

• You own (or buy) 100 shares of LMT near today’s price of $603.16.
• Sell one call option on LMT expiring 6/17/2027, with a strike price of $660, about 9.4% above today.
• Collect roughly $4,495 in premium up front per contract (each contract covers 100 shares), which you keep no matter what the stock does.
• That premium is about 8.8% annualized on the $60,316 of stock, income you earn just for holding.
• If LMT finishes above $660, your shares are called away at $660. Counting the premium, your total return works out to about 20% annualized, but you give up any gains above the strike.

Both Outcomes Put Cash In Your Pocket

If LMT finishes below $660 on 6/17/2027, the call expires worthless, and you keep the full $4,495 premium and all your shares. That is about 7.5% over 311 days, income earned just for holding, and you are free to sell another call.

If LMT finishes above $660, your 100 shares are called away at $660. You still keep the $4,495 premium, and counting it your total gain works out to about 17% over the holding period (about 20% annualized), a healthy exit. The cost of the trade is that any gain above $660 is no longer yours. And if the stock instead falls, you keep the premium but still ride the shares down, cushioned only slightly.

The Real Question: How Much Upside Is At Stake?

The real cost of this trade is the upside you forfeit if the stock blows past your exit price. So, how much of a rocket ride might you be giving up? The bull case is straightforward: demand is a firehose. The company’s book-to-bill ratio hit 3.2-to-1 last quarter, and management just boosted its full-year sales growth forecast, now expecting an 8% year-over-year increase at the midpoint. With multiyear, multibillion-dollar contracts firming up, the argument is that this revenue acceleration has long legs, potentially driving the stock well beyond today’s levels.

On the other hand, there is a reason for the market’s hesitation. As one analyst noted on the latest earnings call, the stock price suggests “a lot of concern” despite the stellar demand signals. The worry is execution. Lockheed is in a “scaling mode right now,” ramping up production on a dizzying number of programs simultaneously, including 10 different munitions alone. That’s a massive operational lift. If you believe that converting that historic backlog into smooth, profitable growth will be a bumpy ride, then collecting a guaranteed income now to cap your gains at a higher price looks like a pretty savvy move. For investors considering this trade, the thing to watch is how cleanly the company manages this portfolio-wide production ramp; any signs of strain could make that upfront income feel like a very smart decision.

How Much Could The Stocks You Hold Pay You?

You may not own LMT, 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: an aerospace & defense ETF like MISL owns the whole aerospace & defense 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.

Pair The Premium With Real Diversification

Selling calls on a stock you own is a sensible way to manufacture income. It is still, by design, a concentrated position, and even owning a whole sector only trades single-name risk for single-theme risk. Real diversification means spreading across sectors, so one industry stumbling does not define your result.

The Trefis High Quality (HQ) Portfolio handles that: about 30 quality, cash-generative companies across sectors, chosen on the full weight of their fundamentals rather than one premium-rich setup, then sized and re-balanced with care. The payoff is a track record of outpacing a benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. Keep the income from trades like this, without pinning your future to any single name or theme.