HRTS Covered Call Strategy
HRTS (Tema Cardiovascular and Metabolic ETF), in the Financial Services sector, (Asset Management industry), listed on NASDAQ.
The Tema Heart & Health ETF (HRTS) seeks to invest in companies that potentially stand to benefit from further advances in biotechnology and healthcare, specifically companies involved in cardiology, metabolic diseases and weight loss therapies.
HRTS (Tema Cardiovascular and Metabolic ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $51.1M, a beta of 0.71 versus the broader market, a 52-week range of 26.5-36.649, average daily share volume of 5K, a public-listing history dating back to 2023. These structural characteristics shape how HRTS etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.71 places HRTS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. HRTS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on HRTS?
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 HRTS snapshot
As of May 15, 2026, spot at $33.51, ATM IV 31.80%, IV rank 30.53%, expected move 9.12%. The covered call on HRTS 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 HRTS specifically: HRTS IV at 31.80% is mid-range versus its 1-year history, so the credit collected on a HRTS covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 9.12% (roughly $3.06 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 HRTS expiries trade a higher absolute premium for lower per-day decay. Position sizing on HRTS should anchor to the underlying notional of $33.51 per share and to the trader's directional view on HRTS etf.
HRTS covered call setup
The HRTS 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 HRTS near $33.51, the first option leg uses a $35.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed HRTS 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 HRTS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $33.51 | long |
| Sell 1 | Call | $35.00 | $0.75 |
HRTS covered call risk and reward
- Net Premium / Debit
- -$3,276.00
- Max Profit (per contract)
- $224.00
- Max Loss (per contract)
- -$3,275.00
- Breakeven(s)
- $32.76
- Risk / Reward Ratio
- 0.068
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.
HRTS covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on HRTS. 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% | -$3,275.00 |
| $7.42 | -77.9% | -$2,534.19 |
| $14.83 | -55.8% | -$1,793.37 |
| $22.23 | -33.6% | -$1,052.56 |
| $29.64 | -11.5% | -$311.74 |
| $37.05 | +10.6% | +$224.00 |
| $44.46 | +32.7% | +$224.00 |
| $51.87 | +54.8% | +$224.00 |
| $59.28 | +76.9% | +$224.00 |
| $66.68 | +99.0% | +$224.00 |
When traders use covered call on HRTS
Covered calls on HRTS are an income strategy run on existing HRTS etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
HRTS thesis for this covered call
The market-implied 1-standard-deviation range for HRTS extends from approximately $30.45 on the downside to $36.57 on the upside. A HRTS covered call collects premium on an existing long HRTS position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether HRTS will breach that level within the expiration window. Current HRTS IV rank near 30.53% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on HRTS should anchor more to the directional view and the expected-move geometry. As a Financial Services name, HRTS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to HRTS-specific events.
HRTS 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. HRTS positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move HRTS alongside the broader basket even when HRTS-specific fundamentals are unchanged. Short-premium structures like a covered call on HRTS carry tail risk when realized volatility exceeds the implied move; review historical HRTS earnings reactions and macro stress periods before sizing. Always rebuild the position from current HRTS chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on HRTS?
- A covered call on HRTS is the covered call strategy applied to HRTS (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 HRTS etf trading near $33.51, the strikes shown on this page are snapped to the nearest listed HRTS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are HRTS 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 HRTS covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 31.80%), the computed maximum profit is $224.00 per contract and the computed maximum loss is -$3,275.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a HRTS covered call?
- The breakeven for the HRTS covered call priced on this page is roughly $32.76 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 HRTS market-implied 1-standard-deviation expected move is approximately 9.12%; 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 HRTS?
- Covered calls on HRTS are an income strategy run on existing HRTS 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 HRTS implied volatility affect this covered call?
- HRTS ATM IV is at 31.80% with IV rank near 30.53%, 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.