Make Your STX Shares Pay You 26% Per Year While You Hold Them

Here is a way to get paid a meaningful cash income on your Seagate Technology shares right now, income you keep no matter what, in exchange for capping your gains at a higher price.

After a blistering 445% run over the past year, shares of Seagate Technology (STX) are taking a breather, now trading about 20% below their 52-week high. For investors sitting on a handsome gain, that raises a question: lock some of it in, or hold on for the next leg up? Here's a trade that offers a third way, paying you a significant cash income now for your patience, which you keep regardless of what the stock does next.

26% annualized income on STX shares you already own, with 25% upside room, by selling a covered call.

• You own (or buy) 100 shares of STX near today's price of $878.21.
• Sell one call option on STX expiring 6/17/2027, with a strike price of $1100, about 25% above today.
• Collect roughly $18,655 in premium up front per contract (each contract covers 100 shares), which you keep no matter what the stock does.
• That premium is about 26% annualized on the $87,821 of stock, income you earn just for holding.
• If STX finishes above $1100, your shares are called away at $1100. Counting the premium, your total return works out to about 57% annualized, but you give up any gains above the strike.

Two Outcomes, You Keep The Income Either Way

If STX finishes below $1100 on 6/17/2027, the call expires worthless, and you keep the full $18,655 premium and all your shares. That is about 21% over 309 days, income earned just for holding, and you are free to sell another call.

If STX finishes above $1100, your 100 shares are called away at $1100. You still keep the $18,655 premium, and counting it your total gain works out to about 46% over the holding period (about 57% annualized), a healthy exit. The cost of the trade is that any gain above $1100 is no longer yours. And if the stock instead falls, you keep the premium but still ride the shares down, with the premium cushioning the decline by about 21%.

Would You Be Happy To Sell STX Higher?

The only real cost is the opportunity you give up if the stock blows past your exit price. So, how much blue sky are you really capping? On one hand, Seagate's business looks like a fortress. Fueled by demand from cloud customers building out AI infrastructure, the company just posted its "strongest quarter in over a decade" for free cash flow and expects fiscal 2027 revenue growth to outpace the 34% it just delivered. Management notes that the vast majority of its high-capacity drive output is already allocated to customers through calendar 2028, with some even looking to lock in supply through 2029 and beyond. That's not hope; that's a backlog.

On the other hand, Seagate is performing a high-wire act. The company is in the middle of a complex and critical transition to its next-generation HAMR drive technology. While this is the key to future growth, management admits these transitions create "inefficiency in your factories" and put "strain on our internal heads and media fabs." The company's long-term target for exabyte growth is in the "mid-20% range," yet recent performance has been well above that, prompting questions of whether the current torrid pace can be sustained. If execution stumbles or growth reverts to the mean, the stock's upward path could get a lot tougher.

Ultimately, the decision to cap your upside for income today comes down to whether you see that locked-in demand as an unstoppable force or view the manufacturing transition as a serious risk. The clearest signal will be the company's gross margin, which it has expanded for a "13th consecutive quarter." If that streak continues, it's a sign Seagate is navigating the transition while maintaining its pricing power. If it stalls, it could mean the best of the run is in the rearview.

What Income Could Your Own Stocks Pay?

You may not own STX, 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.

Income From One Name, Stability From Many

Getting paid to cap the upside on a stock you own is a smart way to squeeze income from it. But a single covered call, and even a single-theme fund, still rides one slice of the market. What steadies a portfolio is breadth across sectors, where a rough stretch for one industry is offset by a good one elsewhere.

The Trefis High Quality (HQ) Portfolio provides that breadth: roughly 30 quality, cash-generative companies spanning sectors, judged on the full picture of their fundamentals rather than one options setup, and re-balanced as conditions change. It carries 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 collecting premium on individual names, with a cross-sector core doing the heavy lifting.