Make Your TDG Shares Pay You 9.8% A Year While You Hold Them

Get paid a real income now on your TransDigm shares, which you keep no matter what the stock does, in exchange for capping your gains above a higher price.

TransDigm (TDG) just posted another strong quarter, with its commercial transport aftermarket growing 18%, and yet the stock sits about 15% below its 52-week high. For owners of this high-quality aerospace components supplier, that sets up an interesting question: what to do while you wait? One answer is to get paid for that patience, generating a meaningful income stream right now on the shares you already hold.

9.8% annualized income on TDG shares you already own, with 10% of upside room, by selling a covered call.

• You own (or buy) 100 shares of TDG near today’s price of $1233.78.
• Sell one call option on TDG expiring 12/17/2027, with a strike price of $1360, about 10% above today.
• Collect roughly $16,300 in premium up front per contract (each contract covers 100 shares), which you keep no matter what the stock does.
• That premium is about 9.8% annualized on the $123,378 of stock, income you earn just for holding.
• If TDG finishes above $1360, your shares are called away at $1360. Counting the premium, your total return works out to about 17% annualized, but you give up any gains above the strike.

Both Outcomes Put Cash In Your Pocket

If TDG finishes below $1360 on 12/17/2027, the call expires worthless, and you keep the full $16,300 premium and all your shares. That is about 13% over 486 days, income earned just for holding, and you are free to sell another call.

If TDG finishes above $1360, your 100 shares are called away at $1360. You still keep the $16,300 premium, and counting it your total gain works out to about 23% over the holding period (about 17% annualized), a healthy exit. The cost of the trade is that any gain above $1360 is no longer yours. And if the stock instead falls, you keep the premium but still ride the shares down: the premium offsets the first 13% of the decline over the holding period and nothing beyond it.

What Upside Would You Be Handing Over?

The only catch is that you agree to cap your upside at a higher price. So, how much blue sky are you really giving up? The bull case is straightforward: the business is humming. Management just raised its full-year sales guidance by $150 million at the midpoint, powered by that roaring aftermarket. If that operational momentum continues, the stock could easily climb well past your exit price, and you’d miss out on those extra gains. This is the core of the bull case for a company that is a key supplier in the aerospace and defense sector.

But there’s a genuine counterargument, one analysts are pressing. The concern, as one put it, is that it might be “increasingly difficult to find aerospace acquisitions that are large enough to move the needle.” This isn’t just theory; the company recently had to withdraw from the acquisition of Stellant after a government regulator “intended to challenge the transaction.” If TransDigm’s M&A activities, its core value-creation strategy, starts to face more regulatory friction, the stock’s climb could be far more gradual. The key thing to watch is that deal pipeline. Management says it has firepower “in excess of $10 billion,” and your decision on this trade comes down to whether you believe they can deploy it effectively.

See The Covered-Call Income On A Stock You Own

You may not own TDG, 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.

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.