ADI Covered Call Strategy
ADI (Analog Devices, Inc.), in the Technology sector, (Semiconductors industry), listed on NASDAQ.
Analog Devices, Inc. designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems that leverage analog, mixed-signal, and digital signal processing technologies. The company provides data converter products, which translate real-world analog signals into digital data, as well as translates digital data into analog signals; power management and reference products for power conversion, driver monitoring, sequencing, and energy management applications in the automotive, communications, industrial, and high-end consumer markets; and power ICs include performance, integration, and software design simulation tools for accurate power supply designs. It also offers high-performance amplifiers to condition analog signals; and radio frequency and microwave ICs to support cellular infrastructure; and microelectromechanical systems technology solutions, including accelerometers used to sense acceleration, gyroscopes for sense rotation, inertial measurement units to sense multiple degrees of freedom, and broadband switches for radio and instrument systems, as well as isolators. In addition, the company offers digital signal processing and system products for high-speed numeric calculations. It serves clients in the industrial, automotive, consumer, instrumentation, aerospace, and communications markets through a direct sales force, third-party distributors, and independent sales representatives in the United States, the rest of North and South America, Europe, Japan, China, and rest of Asia, as well as through its Website. Analog Devices, Inc. was incorporated in 1965 and is headquartered in Wilmington, Massachusetts.
ADI (Analog Devices, Inc.) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $211.09B, a trailing P/E of 78.09, a beta of 1.19 versus the broader market, a 52-week range of 206-435.72, average daily share volume of 3.8M, a public-listing history dating back to 1980, approximately 24K full-time employees. These structural characteristics shape how ADI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.19 places ADI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 78.09 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. ADI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on ADI?
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 ADI snapshot
As of May 15, 2026, spot at $418.24, ATM IV 48.76%, IV rank 96.41%, expected move 13.98%. The covered call on ADI 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 28-day expiry.
Why this covered call structure on ADI specifically: ADI IV at 48.76% is rich versus its 1-year range, which favors premium-selling structures like a ADI covered call, with a market-implied 1-standard-deviation move of approximately 13.98% (roughly $58.47 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ADI expiries trade a higher absolute premium for lower per-day decay. Position sizing on ADI should anchor to the underlying notional of $418.24 per share and to the trader's directional view on ADI stock.
ADI covered call setup
The ADI 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 ADI near $418.24, the first option leg uses a $440.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ADI chain at a 28-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 ADI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $418.24 | long |
| Sell 1 | Call | $440.00 | $13.65 |
ADI covered call risk and reward
- Net Premium / Debit
- -$40,459.00
- Max Profit (per contract)
- $3,541.00
- Max Loss (per contract)
- -$40,458.00
- Breakeven(s)
- $404.59
- Risk / Reward Ratio
- 0.088
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.
ADI covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on ADI. 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% | -$40,458.00 |
| $92.48 | -77.9% | -$31,210.59 |
| $184.96 | -55.8% | -$21,963.19 |
| $277.43 | -33.7% | -$12,715.78 |
| $369.91 | -11.6% | -$3,468.37 |
| $462.38 | +10.6% | +$3,541.00 |
| $554.85 | +32.7% | +$3,541.00 |
| $647.33 | +54.8% | +$3,541.00 |
| $739.80 | +76.9% | +$3,541.00 |
| $832.28 | +99.0% | +$3,541.00 |
When traders use covered call on ADI
Covered calls on ADI are an income strategy run on existing ADI stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
ADI thesis for this covered call
The market-implied 1-standard-deviation range for ADI extends from approximately $359.77 on the downside to $476.71 on the upside. A ADI covered call collects premium on an existing long ADI position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether ADI will breach that level within the expiration window. Current ADI IV rank near 96.41% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on ADI at 48.76%. As a Technology name, ADI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ADI-specific events.
ADI 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. ADI positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ADI alongside the broader basket even when ADI-specific fundamentals are unchanged. Short-premium structures like a covered call on ADI carry tail risk when realized volatility exceeds the implied move; review historical ADI earnings reactions and macro stress periods before sizing. Always rebuild the position from current ADI chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on ADI?
- A covered call on ADI is the covered call strategy applied to ADI (stock). 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 ADI stock trading near $418.24, the strikes shown on this page are snapped to the nearest listed ADI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ADI 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 ADI covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 48.76%), the computed maximum profit is $3,541.00 per contract and the computed maximum loss is -$40,458.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ADI covered call?
- The breakeven for the ADI covered call priced on this page is roughly $404.59 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 ADI market-implied 1-standard-deviation expected move is approximately 13.98%; 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 ADI?
- Covered calls on ADI are an income strategy run on existing ADI stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
- How does current ADI implied volatility affect this covered call?
- ADI ATM IV is at 48.76% with IV rank near 96.41%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.