REM Covered Call Strategy
REM (iShares Mortgage Real Estate ETF), in the Financial Services sector, (Asset Management industry), listed on CBOE.
The iShares Mortgage Real Estate ETF seeks to track the investment results of an index composed of U.S. REITs that hold U.S. residential and commercial mortgages.
REM (iShares Mortgage Real Estate ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $571.3M, a beta of 1.10 versus the broader market, a 52-week range of 20.35-24.05, average daily share volume of 692K, a public-listing history dating back to 2007. These structural characteristics shape how REM etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.10 places REM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. REM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on REM?
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 REM snapshot
As of May 15, 2026, spot at $21.77, ATM IV 25.00%, IV rank 3.87%, expected move 7.17%. The covered call on REM 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 REM specifically: REM IV at 25.00% is on the cheap side of its 1-year range, which means a premium-selling REM covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 7.17% (roughly $1.56 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 REM expiries trade a higher absolute premium for lower per-day decay. Position sizing on REM should anchor to the underlying notional of $21.77 per share and to the trader's directional view on REM etf.
REM covered call setup
The REM 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 REM near $21.77, the first option leg uses a $23.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed REM 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 REM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $21.77 | long |
| Sell 1 | Call | $23.00 | $0.21 |
REM covered call risk and reward
- Net Premium / Debit
- -$2,156.00
- Max Profit (per contract)
- $144.00
- Max Loss (per contract)
- -$2,155.00
- Breakeven(s)
- $21.56
- Risk / Reward Ratio
- 0.067
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.
REM covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on REM. 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% | -$2,155.00 |
| $4.82 | -77.8% | -$1,673.76 |
| $9.63 | -55.7% | -$1,192.53 |
| $14.45 | -33.6% | -$711.29 |
| $19.26 | -11.5% | -$230.06 |
| $24.07 | +10.6% | +$144.00 |
| $28.88 | +32.7% | +$144.00 |
| $33.70 | +54.8% | +$144.00 |
| $38.51 | +76.9% | +$144.00 |
| $43.32 | +99.0% | +$144.00 |
When traders use covered call on REM
Covered calls on REM are an income strategy run on existing REM etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
REM thesis for this covered call
The market-implied 1-standard-deviation range for REM extends from approximately $20.21 on the downside to $23.33 on the upside. A REM covered call collects premium on an existing long REM position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether REM will breach that level within the expiration window. Current REM IV rank near 3.87% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on REM at 25.00%. As a Financial Services name, REM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to REM-specific events.
REM 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. REM positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move REM alongside the broader basket even when REM-specific fundamentals are unchanged. Short-premium structures like a covered call on REM carry tail risk when realized volatility exceeds the implied move; review historical REM earnings reactions and macro stress periods before sizing. Always rebuild the position from current REM chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on REM?
- A covered call on REM is the covered call strategy applied to REM (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 REM etf trading near $21.77, the strikes shown on this page are snapped to the nearest listed REM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are REM 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 REM covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 25.00%), the computed maximum profit is $144.00 per contract and the computed maximum loss is -$2,155.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a REM covered call?
- The breakeven for the REM covered call priced on this page is roughly $21.56 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 REM market-implied 1-standard-deviation expected move is approximately 7.17%; 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 REM?
- Covered calls on REM are an income strategy run on existing REM 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 REM implied volatility affect this covered call?
- REM ATM IV is at 25.00% with IV rank near 3.87%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.