ALG Covered Call Strategy
ALG (Alamo Group Inc.), in the Industrials sector, (Agricultural - Machinery industry), listed on NYSE.
Alamo Group Inc. is a global enterprise specializing in the design, production, distribution, and servicing of equipment crucial for managing vegetation and maintaining public and private infrastructure. It serves a broad international clientele spanning governmental agencies, industrial operations, and agricultural businesses. The company operates through two main divisions: Vegetation Management Division: This segment provides a comprehensive range of machinery and associated components for controlling plant growth and preparing land. Offerings include robust, hydraulically-powered and tractor-mounted mowers, various types of cutters for intensive use, specialized agricultural implements such as rotary tillers, posthole diggers, and scraper blades, as well as zero-turn mowers, snow blowers, and rock removal equipment. It also supplies a wide array of replacement parts, from cutting blades to fertilizer application components and hydraulic boom-mounted hedge and grass cutters. Industrial Equipment Division: This division focuses on apparatus for public works and utility maintenance.
ALG (Alamo Group Inc.) trades in the Industrials sector, specifically Agricultural - Machinery, with a market capitalization of approximately $2.05B, a trailing P/E of 20.10, a beta of 1.11 versus the broader market, a 52-week range of 145.76-233.29, average daily share volume of 186K, 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 1.11 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 June 30, 2026, spot at $165.24, ATM IV 30.90%, IV rank 6.51%, expected move 8.86%. 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 17-day expiry.
Why this covered call structure on ALG specifically: ALG IV at 30.90% 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 8.86% (roughly $14.64 on the underlying). The 17-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 $165.24 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 $165.24, the first option leg uses a $175.00 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 17-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 | $165.24 | long |
| Sell 1 | Call | $175.00 | $0.85 |
ALG covered call risk and reward
- Net Premium / Debit
- -$16,439.00
- Max Profit (per contract)
- $1,061.00
- Max Loss (per contract)
- -$16,438.00
- Breakeven(s)
- $164.39
- Risk / Reward Ratio
- 0.065
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% | -$16,438.00 |
| $36.54 | -77.9% | -$12,784.56 |
| $73.08 | -55.8% | -$9,131.13 |
| $109.61 | -33.7% | -$5,477.69 |
| $146.15 | -11.6% | -$1,824.25 |
| $182.68 | +10.6% | +$1,061.00 |
| $219.22 | +32.7% | +$1,061.00 |
| $255.75 | +54.8% | +$1,061.00 |
| $292.28 | +76.9% | +$1,061.00 |
| $328.82 | +99.0% | +$1,061.00 |
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 $150.60 on the downside to $179.88 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 6.51% 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 30.90%. 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 $165.24, 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 30.90%), the computed maximum profit is $1,061.00 per contract and the computed maximum loss is -$16,438.00 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 $164.39 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 8.86%; 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 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 30.90% with IV rank near 6.51%, 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.