ALG Covered Call Strategy
ALG (Alamo Group Inc.), in the Industrials sector, (Agricultural - Machinery industry), listed on NYSE.
Alamo Group Inc. designs, manufactures, distributes, and services vegetation management and infrastructure maintenance equipment for governmental, industrial, and agricultural uses worldwide. Its Vegetation Management Division segment offers hydraulically-powered and tractor-mounted mowers, other cutters and replacement parts for heavy-duty and intensive uses and heavy duty applications, tractor- and truck-mounted mowing and vegetation maintenance equipment, and replacement parts. This segment also provides rotary and finishing mowers, flail and disc mowers, front-end loaders, backhoes, rotary tillers, posthole diggers, scraper blades and replacement parts, zero turn radius mowers, cutting parts, plain and hard-faced replacement tillage tools, disc blades, and fertilizer application components; aftermarket agricultural parts, heavy-duty mechanical rotary mowers, snow blowers, rock removal equipment, replacement parts, tractor attachments, agricultural implements, hydraulic and boom-mounted hedge and grass cutters, tractor attachments and implements, hedgerow cutters, industrial grass mowers, agricultural seedbed preparation cultivators, self-propelled sprayers and multi-drive load-carrying vehicles, cutting blades, and hydraulic and mechanical boom mowers. The company's Industrial Equipment Division segment offers truck-mounted air vacuum, mechanical broom, and regenerative air sweepers, pothole patchers, leaf collection equipment and replacement brooms, parking lot and street sweepers, excavators, catch basin cleaners, and roadway debris vacuum systems, as well as truck-mounted vacuum machines, combination sewer cleaners, and hydro excavators. This segment also offers ice control products, snowplows and heavy duty snow removal equipment, hitches, attachments, and graders; and public works and runway maintenance products, parts, and services, and high pressure cleaning systems and trenchers. The company was founded in 1955 and is headquartered in Seguin, Texas.
ALG (Alamo Group Inc.) trades in the Industrials sector, specifically Agricultural - Machinery, with a market capitalization of approximately $1.85B, a trailing P/E of 18.06, a beta of 1.17 versus the broader market, a 52-week range of 149.66-233.29, average daily share volume of 173K, a public-listing history dating back to 1993, approximately 4K full-time employees. These structural characteristics shape how ALG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.17 places ALG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. ALG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on ALG?
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 ALG snapshot
As of May 15, 2026, spot at $147.48, ATM IV 31.30%, IV rank 6.60%, expected move 8.97%. The covered call on ALG 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 ALG specifically: ALG IV at 31.30% is on the cheap side of its 1-year range, which means a premium-selling ALG covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 8.97% (roughly $13.23 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 ALG expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALG should anchor to the underlying notional of $147.48 per share and to the trader's directional view on ALG stock.
ALG covered call setup
The ALG 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 ALG near $147.48, the first option leg uses a $155.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALG 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 ALG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $147.48 | long |
| Sell 1 | Call | $155.00 | $2.78 |
ALG covered call risk and reward
- Net Premium / Debit
- -$14,470.50
- Max Profit (per contract)
- $1,029.50
- Max Loss (per contract)
- -$14,469.50
- Breakeven(s)
- $144.70
- Risk / Reward Ratio
- 0.071
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.
ALG covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on ALG. 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% | -$14,469.50 |
| $32.62 | -77.9% | -$11,208.75 |
| $65.23 | -55.8% | -$7,947.99 |
| $97.83 | -33.7% | -$4,687.24 |
| $130.44 | -11.6% | -$1,426.48 |
| $163.05 | +10.6% | +$1,029.50 |
| $195.66 | +32.7% | +$1,029.50 |
| $228.26 | +54.8% | +$1,029.50 |
| $260.87 | +76.9% | +$1,029.50 |
| $293.48 | +99.0% | +$1,029.50 |
When traders use covered call on ALG
Covered calls on ALG are an income strategy run on existing ALG stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
ALG thesis for this covered call
The market-implied 1-standard-deviation range for ALG extends from approximately $134.25 on the downside to $160.71 on the upside. A ALG covered call collects premium on an existing long ALG position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether ALG will breach that level within the expiration window. Current ALG IV rank near 6.60% 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 ALG at 31.30%. As a Industrials name, ALG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALG-specific events.
ALG 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. ALG positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALG alongside the broader basket even when ALG-specific fundamentals are unchanged. Short-premium structures like a covered call on ALG carry tail risk when realized volatility exceeds the implied move; review historical ALG earnings reactions and macro stress periods before sizing. Always rebuild the position from current ALG chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on ALG?
- A covered call on ALG is the covered call strategy applied to ALG (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 ALG stock trading near $147.48, the strikes shown on this page are snapped to the nearest listed ALG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ALG 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 ALG covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 31.30%), the computed maximum profit is $1,029.50 per contract and the computed maximum loss is -$14,469.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ALG covered call?
- The breakeven for the ALG covered call priced on this page is roughly $144.70 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 ALG market-implied 1-standard-deviation expected move is approximately 8.97%; 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 ALG?
- Covered calls on ALG are an income strategy run on existing ALG 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 ALG implied volatility affect this covered call?
- ALG ATM IV is at 31.30% with IV rank near 6.60%, 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.