Options Income Strategy | DELL has surged over 260% YTD; can the stock hit new highs after earnings?

1. DELL: Stock price fluctuates at high levels ahead of earnings report; will it hit new highs after the results?

$Dell Technologies (DELL.US)$ Closed down 3.39% on Friday at $456.24, with trading volume of 3.9549 million shares, below the 10-day average volume of approximately 4.6561 million shares. This indicates reluctance to sell holdings ahead of the earnings report, suggesting limited selling pressure.

The company's stock has gained approximately 260% year-to-date and will release its Q2 FY2027 earnings report after the market close on September 1 (Tuesday).

Technical Analysis:

$Dell Technologies (DELL.US)$ The stock surged 32% following last quarter's earnings report, then fluctuated at high levels. It launched a sharp rally from the $390 range in early August, hitting an all-time high of $514 intraday on August 13 before pulling back.

Regarding moving averages, the current stock price remains significantly above both the 60-day and 120-day moving averages, indicating a sound medium-to-long-term bullish structure. Resistance lies in the $490–$500 range (previous consolidation platform); on the support side, $450 (psychological level) and $427 (60-day moving average) form a stepped defense.

Fundamental Analysis:

Given the stock's approximate 260% surge year-to-date, market expectations for Dell's Q2 FY2027 performance are high. Analysts' consensus estimate for Q2 revenue is approximately $44.466 billion, representing a nearly 50% year-over-year increase. The company's previously issued Q2 guidance projected revenue of $44–$45 billion and EPS of approximately $4.80.

AI infrastructure is the core driver behind Dell's recent stock surge, with the market focusing on the following dimensions:

- AI Server Revenue:Last quarter, the full-year target was raised to $60 billion, approximately 2.4 times that of the same period last year. The market is watching to see if this target will be raised again.

- Backlog and Conversion:At the end of last quarter, the backlog for AI servers reached a record high of $51.3 billion. The key focus of this earnings report is whether the backlog can be effectively converted into recognized revenue, and whether the growth rate of new orders is sufficient to maintain the backlog size. Supply chain bottlenecks (especially in memory supply) are currently the main factors limiting deliveries.

2. Short Option Strategies

IV Analysis:

DELL's current Implied Volatility (IV) is approximately 79%, with an IV Rank around the 70th historical percentile, indicating it is in a relatively high volatility range over the past year. The high IV status ahead of the earnings report creates a premium window for selling strategies. Options chain data shows that the call option wall is concentrated at the $500 strike price.

Cash Secured Put

Sell 1 contract of $Dell Technologies (DELL.US)$ Sell the DELL 390 Put expiring on 2026-09-04, and reserve sufficient cash for potential assignment.

Opportunity screening logic:

$Dell Technologies (DELL.US)$ With the stock price up 260% year-to-date, earnings approaching, and implied volatility elevated, chasing the highs directly carries significant risk. Investors bullish on Dell's medium-to-long-term investment value can sell out-of-the-money puts to collect high IV premiums. If the stock remains strong and volatile after earnings, this enhances capital returns; if it pulls back to around $390, it equates to entering the position at a lower price than the current level.

3. Covered Call

Hold 100 shares $Dell Technologies (DELL.US)$While holding the underlying stock, sell 1 contract of DELL 535 Call expiring on 2026-09-04.

Opportunity screening logic:

For investors holding $Dell Technologies (DELL.US)$ the underlying stock, given the upcoming earnings report and high short-term uncertainty, consider selling out-of-the-money Calls. If earnings beat expectations and drive the stock up to this strike price where it gets assigned, it effectively locks in profits near a high target. If the stock trades sideways at highs or experiences a mild pullback after earnings, the premium collected can partially hedge downside risk while maintaining exposure to long-term AI growth.

3. Risk Control Notes

Although short-option strategies generally have a high probability of profit, investors must still implement sound risk management:

- Position management is core. The biggest risk for option sellers lies in black swan events. It is recommended that margin usage for a single underlying asset should not exceed 20% of total capital. Do not sell options beyond your capacity to bear potential losses just to chase premiums.

- Pay attention to rolling positions for Covered Calls. When a Covered Call becomes deep in-the-money, if you remain bullish on the underlying stock, consider buying back the current option to close the position and simultaneously selling an option with a further expiration date and a higher strike price. This helps avoid having the underlying shares forcibly sold at a lower price.

- Be wary of left-tail risks when writing cash-secured puts. If the stock price drops significantly due to deteriorating fundamentals, do not mechanically hold on. Instead, cut losses or roll down the position based on your risk tolerance.

Make good use of the Option Seller Zone to understand income strategies for selling options,and earn option premiums!

Investors can openFutubull >> Market >> Options >> Seller Zone >> Filter, to filter for option underlyings that suit their risk appetite and investment needs.

The screening criteria for the option cases provided in this article are:

Stock Screening: Market Cap > $10 billion; IV > 70%; IV Percentile > 50%; Total Option Volume > 60,000 contracts

Options Screening Criteria: Expiration 0-45 days; Probability of being OTM > 70%; Return > 1%; Annualized Return > 30%; Volume > 100 contracts

Underlying Selection Rule: Sorted by probability, prioritizing underlying assets with higher probabilities. Probability refers to the likelihood that the sold option contract will not be exercised, i.e., the Out-of-the-Money (OTM) probability. A higher probability indicates a lower chance of being assigned, and thus a greater likelihood of securely collecting the option premium.

All data and information in the Option Seller Zone are for reference only and do not constitute any investment advice.

This content is for reference only and should not be regarded or construed as an offer, solicitation, invitation, or recommendation to buy or sell any investment products, nor as a basis for investment decisions. It should not be interpreted as professional advice. Option contracts are derivative products and are not suitable for all investors. You should carefully assess whether you are suitable for participating in such trading based on your own investment experience, investment objectives, financial resources, and other relevant conditions.

The risk of loss in trading option contracts can be substantial. In certain circumstances, the losses you incur may exceed the initial margin deposited. Even if you have set contingency orders, such as "stop-loss" or "limit" orders, losses may not be avoided. Market conditions may prevent these orders from being executed. You may be required to deposit additional margin within a short period. If you fail to provide the required amount within the specified time, your open positions may be liquidated. However, you will still be liable for any deficit in your account resulting from this. Therefore, before trading, you should study and understand options, and carefully consider whether such trading is suitable for you based on your financial situation and investment objectives. If you trade options, you should be familiar with the procedures for exercising options and at expiration, as well as your rights and obligations upon exercise and at expiration. "Futubull" is a one-stop financial investment and trading platform, with securities services provided by Futu Securities International (Hong Kong) Limited.

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