RETL Covered Call Strategy
RETL (Direxion Daily Retail Bull 3X ETF), in the Financial Services sector, (Asset Management industry), listed on AMEX.
The Direxion Daily Retail Bull 3X ETF seeks daily investment results, before fees and expenses, of 300% of the performance of the S&P Retail Select Industry Index. There is no guarantee the fund will achieve its stated investment objective.
RETL (Direxion Daily Retail Bull 3X ETF) trades in the Financial Services sector, specifically Asset Management, with a market capitalization of approximately $26.5M, a beta of 4.04 versus the broader market, a 52-week range of 6.72-11.29, average daily share volume of 649K, a public-listing history dating back to 2010. These structural characteristics shape how RETL etf options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 4.04 indicates RETL has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. RETL pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on RETL?
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 RETL snapshot
As of May 15, 2026, spot at $6.84, ATM IV 90.20%, IV rank 15.62%, expected move 25.86%. The covered call on RETL 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 RETL specifically: RETL IV at 90.20% is on the cheap side of its 1-year range, which means a premium-selling RETL covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 25.86% (roughly $1.77 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 RETL expiries trade a higher absolute premium for lower per-day decay. Position sizing on RETL should anchor to the underlying notional of $6.84 per share and to the trader's directional view on RETL etf.
RETL covered call setup
The RETL 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 RETL near $6.84, the first option leg uses a $7.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RETL 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 RETL shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $6.84 | long |
| Sell 1 | Call | $7.00 | $0.73 |
RETL covered call risk and reward
- Net Premium / Debit
- -$611.50
- Max Profit (per contract)
- $88.50
- Max Loss (per contract)
- -$610.50
- Breakeven(s)
- $6.12
- Risk / Reward Ratio
- 0.145
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.
RETL covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on RETL. 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 | -99.9% | -$610.50 |
| $1.52 | -77.8% | -$459.37 |
| $3.03 | -55.7% | -$308.25 |
| $4.54 | -33.6% | -$157.12 |
| $6.06 | -11.5% | -$6.00 |
| $7.57 | +10.6% | +$88.50 |
| $9.08 | +32.7% | +$88.50 |
| $10.59 | +54.8% | +$88.50 |
| $12.10 | +76.9% | +$88.50 |
| $13.61 | +99.0% | +$88.50 |
When traders use covered call on RETL
Covered calls on RETL are an income strategy run on existing RETL etf positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
RETL thesis for this covered call
The market-implied 1-standard-deviation range for RETL extends from approximately $5.07 on the downside to $8.61 on the upside. A RETL covered call collects premium on an existing long RETL position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether RETL will breach that level within the expiration window. Current RETL IV rank near 15.62% 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 RETL at 90.20%. As a Financial Services name, RETL options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RETL-specific events.
RETL 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. RETL positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RETL alongside the broader basket even when RETL-specific fundamentals are unchanged. Short-premium structures like a covered call on RETL carry tail risk when realized volatility exceeds the implied move; review historical RETL earnings reactions and macro stress periods before sizing. Always rebuild the position from current RETL chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on RETL?
- A covered call on RETL is the covered call strategy applied to RETL (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 RETL etf trading near $6.84, the strikes shown on this page are snapped to the nearest listed RETL chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are RETL 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 RETL covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 90.20%), the computed maximum profit is $88.50 per contract and the computed maximum loss is -$610.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a RETL covered call?
- The breakeven for the RETL covered call priced on this page is roughly $6.12 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 RETL market-implied 1-standard-deviation expected move is approximately 25.86%; 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 RETL?
- Covered calls on RETL are an income strategy run on existing RETL 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 RETL implied volatility affect this covered call?
- RETL ATM IV is at 90.20% with IV rank near 15.62%, 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.