How are ALGM 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 ALGM covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 70.70%), the computed maximum profit is $740.00 per contract and the computed maximum loss is -$3,759.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a ALGM covered call?

The breakeven for the ALGM covered call priced on this page is roughly $37.60 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 ALGM market-implied 1-standard-deviation expected move is approximately 20.27%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current ALGM implied volatility affect this covered call?

ALGM ATM IV is at 70.70% with IV rank near 51.28%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.

ALGM Covered Call Strategy

ALGM (Allegro MicroSystems, Inc.), in the Technology sector, (Semiconductors industry), listed on NASDAQ.

Allegro MicroSystems, Inc. designs, develops, manufactures, and markets sensor integrated circuits (ICs) and application-specific analog power ICs for motion control and energy-efficient systems. Its products include magnetic sensor ICs, such as position, speed, and current sensor ICs; power ICs comprising motor driver ICs, and regulator and LED driver ICs; and photonic and 3D sensing components, including photodiodes, eye-safe lasers, and readout ICs for LiDAR applications. The company sells its products to original equipment manufacturers and suppliers primarily in the automotive and industrial markets through its direct sales force, third party distributors, independent sales representatives, and consignment. It operates in the United States, rest of the Americas, Europe, Japan, Greater China, South Korea, and other Asian markets. The company was founded in 1990 and is headquartered in Manchester, New Hampshire. Allegro MicroSystems, Inc. is a subsidiary of Sanken Electric Co., Ltd.

ALGM (Allegro MicroSystems, Inc.) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $8.52B, a beta of 2.02 versus the broader market, a 52-week range of 22.41-51.4, average daily share volume of 2.2M, a public-listing history dating back to 2020, approximately 5K full-time employees. These structural characteristics shape how ALGM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 2.02 indicates ALGM has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.

What is a covered call on ALGM?

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 ALGM snapshot

As of May 15, 2026, spot at $43.30, ATM IV 70.70%, IV rank 51.28%, expected move 20.27%. The covered call on ALGM 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 98-day expiry.

Why this covered call structure on ALGM specifically: ALGM IV at 70.70% is mid-range versus its 1-year history, so the credit collected on a ALGM covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 20.27% (roughly $8.78 on the underlying). The 98-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ALGM expiries trade a higher absolute premium for lower per-day decay. Position sizing on ALGM should anchor to the underlying notional of $43.30 per share and to the trader's directional view on ALGM stock.

ALGM covered call setup

The ALGM 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 ALGM near $43.30, the first option leg uses a $45.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ALGM chain at a 98-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 ALGM shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$43.30	long
Sell 1	Call	$45.00	$5.70

ALGM covered call risk and reward

Net Premium / Debit: -$3,760.00
Max Profit (per contract): $740.00
Max Loss (per contract): -$3,759.00
Breakeven(s): $37.60
Risk / Reward Ratio: 0.197

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.

ALGM covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on ALGM. 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%	-$3,759.00
$9.58	-77.9%	-$2,801.72
$19.16	-55.8%	-$1,844.45
$28.73	-33.7%	-$887.17
$38.30	-11.5%	+$70.11
$47.87	+10.6%	+$740.00
$57.45	+32.7%	+$740.00
$67.02	+54.8%	+$740.00
$76.59	+76.9%	+$740.00
$86.16	+99.0%	+$740.00

When traders use covered call on ALGM

Covered calls on ALGM are an income strategy run on existing ALGM stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.

ALGM thesis for this covered call

The market-implied 1-standard-deviation range for ALGM extends from approximately $34.52 on the downside to $52.08 on the upside. A ALGM covered call collects premium on an existing long ALGM position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether ALGM will breach that level within the expiration window. Current ALGM IV rank near 51.28% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on ALGM should anchor more to the directional view and the expected-move geometry. As a Technology name, ALGM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ALGM-specific events.

ALGM 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. ALGM positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ALGM alongside the broader basket even when ALGM-specific fundamentals are unchanged. Short-premium structures like a covered call on ALGM carry tail risk when realized volatility exceeds the implied move; review historical ALGM earnings reactions and macro stress periods before sizing. Always rebuild the position from current ALGM chain quotes before placing a trade.

Frequently asked questions

What is a covered call on ALGM?: A covered call on ALGM is the covered call strategy applied to ALGM (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 ALGM stock trading near $43.30, the strikes shown on this page are snapped to the nearest listed ALGM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are ALGM 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 ALGM covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 70.70%), the computed maximum profit is $740.00 per contract and the computed maximum loss is -$3,759.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ALGM covered call?: The breakeven for the ALGM covered call priced on this page is roughly $37.60 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 ALGM market-implied 1-standard-deviation expected move is approximately 20.27%; 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 ALGM?: Covered calls on ALGM are an income strategy run on existing ALGM 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 ALGM implied volatility affect this covered call?: ALGM ATM IV is at 70.70% with IV rank near 51.28%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.