CHAU Covered Call Strategy
CHAU (Direxion Daily CSI 300 China A Share Bull 2X ETF), in the Financial Services sector, (Asset Management - Leveraged industry), listed on AMEX.
The Direxion Daily CSI 300 China A Share Bull 2X ETF seeks daily investment results, before fees and expenses, of 200% of the performance of the CSI 300 Index. There is no guarantee the fund will achieve its stated investment objective.
CHAU (Direxion Daily CSI 300 China A Share Bull 2X ETF) trades in the Financial Services sector, specifically Asset Management - Leveraged, with a market capitalization of approximately $208.9M, a beta of 0.94 versus the broader market, a 52-week range of 13.66-25.81, average daily share volume of 133K, a public-listing history dating back to 2015. These structural characteristics shape how CHAU etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.94 places CHAU roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. CHAU pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on CHAU?
A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income.
Current CHAU snapshot
As of May 15, 2026, spot at $23.77, ATM IV 46.80%, IV rank 62.80%, expected move 13.42%. The covered call on CHAU below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 34-day expiry.
Why this covered call structure on CHAU specifically: CHAU IV at 46.80% is mid-range versus its 1-year history, so the credit collected on a CHAU covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 13.42% (roughly $3.19 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated CHAU expiries trade a higher absolute premium for lower per-day decay. Position sizing on CHAU should anchor to the underlying notional of $23.77 per share and to the trader's directional view on CHAU etf.
CHAU covered call setup
The CHAU covered call below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With CHAU near $23.77, the first option leg uses a $25.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CHAU chain at a 34-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 CHAU shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $23.77 | long |
| Sell 1 | Call | $25.00 | $0.85 |
CHAU covered call risk and reward
- Net Premium / Debit
- -$2,292.00
- Max Profit (per contract)
- $208.00
- Max Loss (per contract)
- -$2,291.00
- Breakeven(s)
- $22.92
- Risk / Reward Ratio
- 0.091
Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium.
CHAU covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on CHAU. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | -$2,291.00 |
| $5.26 | -77.9% | -$1,765.54 |
| $10.52 | -55.7% | -$1,240.09 |
| $15.77 | -33.6% | -$714.63 |
| $21.03 | -11.5% | -$189.17 |
| $26.28 | +10.6% | +$208.00 |
| $31.54 | +32.7% | +$208.00 |
| $36.79 | +54.8% | +$208.00 |
| $42.05 | +76.9% | +$208.00 |
| $47.30 | +99.0% | +$208.00 |
When traders use covered call on CHAU
Covered calls on CHAU are an income strategy run on existing CHAU etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
CHAU thesis for this covered call
The market-implied 1-standard-deviation range for CHAU extends from approximately $20.58 on the downside to $26.96 on the upside. A CHAU covered call collects premium on an existing long CHAU position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether CHAU will breach that level within the expiration window. Current CHAU IV rank near 62.80% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on CHAU should anchor more to the directional view and the expected-move geometry. As a Financial Services name, CHAU options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CHAU-specific events.
CHAU covered call positions are structurally neutral to slightly bullish; the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. CHAU positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CHAU alongside the broader basket even when CHAU-specific fundamentals are unchanged. Short-premium structures like a covered call on CHAU carry tail risk when realized volatility exceeds the implied move; review historical CHAU earnings reactions and macro stress periods before sizing. Always rebuild the position from current CHAU chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on CHAU?
- A covered call on CHAU is the covered call strategy applied to CHAU (etf). The strategy is structurally neutral to slightly bullish: A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income. With CHAU etf trading near $23.77, the strikes shown on this page are snapped to the nearest listed CHAU chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are CHAU covered call max profit and max loss calculated?
- Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium. For the CHAU covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 46.80%), the computed maximum profit is $208.00 per contract and the computed maximum loss is -$2,291.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CHAU covered call?
- The breakeven for the CHAU covered call priced on this page is roughly $22.92 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current CHAU market-implied 1-standard-deviation expected move is approximately 13.42%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a covered call on CHAU?
- Covered calls on CHAU are an income strategy run on existing CHAU etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
- How does current CHAU implied volatility affect this covered call?
- CHAU ATM IV is at 46.80% with IV rank near 62.80%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.