AVAV Covered Call Strategy
AVAV (AeroVironment, Inc.), in the Industrials sector, (Aerospace & Defense industry), listed on NASDAQ.
AeroVironment, Inc. designs, develops, produces, delivers, and supports a portfolio of robotic systems and related services for government agencies and businesses in the United States and internationally. It operates through four segments: Unmanned Aircraft Systems (UAS), Tactical Missile System (TMS), Medium Unmanned Aircraft Systems (MUAS), and High Altitude Pseudo-Satellite Systems (HAPS). The company supplies UAS, TMS, unmanned ground vehicle, and related services primarily to organizations within the U.S. Department of Defense and to international allied governments. It also designs, engineers, tools, and manufactures unmanned aerial and aircraft systems, including airborne platforms, payloads and payload integration, ground control systems, and ground support equipment and other items and services related to unmanned aircraft systems. In addition, the company offers small UAS products, including spare equipment, alternative payload modules, batteries, chargers, repair services, and customer support, as well as multiple aircraft, hand-held ground control system, and spare parts and accessories.
AVAV (AeroVironment, Inc.) trades in the Industrials sector, specifically Aerospace & Defense, with a market capitalization of approximately $8.04B, a beta of 1.36 versus the broader market, a 52-week range of 156-417.86, average daily share volume of 1.6M, a public-listing history dating back to 2007, approximately 1K full-time employees. These structural characteristics shape how AVAV stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.36 indicates AVAV 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 AVAV?
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 AVAV snapshot
As of May 15, 2026, spot at $158.34, ATM IV 69.13%, IV rank 39.71%, expected move 19.82%. The covered call on AVAV 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 AVAV specifically: AVAV IV at 69.13% is mid-range versus its 1-year history, so the credit collected on a AVAV covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 19.82% (roughly $31.38 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 AVAV expiries trade a higher absolute premium for lower per-day decay. Position sizing on AVAV should anchor to the underlying notional of $158.34 per share and to the trader's directional view on AVAV stock.
AVAV covered call setup
The AVAV 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 AVAV near $158.34, the first option leg uses a $165.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed AVAV 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 AVAV shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $158.34 | long |
| Sell 1 | Call | $165.00 | $10.75 |
AVAV covered call risk and reward
- Net Premium / Debit
- -$14,759.00
- Max Profit (per contract)
- $1,741.00
- Max Loss (per contract)
- -$14,758.00
- Breakeven(s)
- $147.59
- Risk / Reward Ratio
- 0.118
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.
AVAV covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on AVAV. 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% | -$14,758.00 |
| $35.02 | -77.9% | -$11,257.13 |
| $70.03 | -55.8% | -$7,756.25 |
| $105.04 | -33.7% | -$4,255.38 |
| $140.04 | -11.6% | -$754.50 |
| $175.05 | +10.6% | +$1,741.00 |
| $210.06 | +32.7% | +$1,741.00 |
| $245.07 | +54.8% | +$1,741.00 |
| $280.08 | +76.9% | +$1,741.00 |
| $315.09 | +99.0% | +$1,741.00 |
When traders use covered call on AVAV
Covered calls on AVAV are an income strategy run on existing AVAV stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
AVAV thesis for this covered call
The market-implied 1-standard-deviation range for AVAV extends from approximately $126.96 on the downside to $189.72 on the upside. A AVAV covered call collects premium on an existing long AVAV position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether AVAV will breach that level within the expiration window. Current AVAV IV rank near 39.71% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on AVAV should anchor more to the directional view and the expected-move geometry. As a Industrials name, AVAV options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to AVAV-specific events.
AVAV 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. AVAV positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move AVAV alongside the broader basket even when AVAV-specific fundamentals are unchanged. Short-premium structures like a covered call on AVAV carry tail risk when realized volatility exceeds the implied move; review historical AVAV earnings reactions and macro stress periods before sizing. Always rebuild the position from current AVAV chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on AVAV?
- A covered call on AVAV is the covered call strategy applied to AVAV (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 AVAV stock trading near $158.34, the strikes shown on this page are snapped to the nearest listed AVAV chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are AVAV 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 AVAV covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 69.13%), the computed maximum profit is $1,741.00 per contract and the computed maximum loss is -$14,758.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a AVAV covered call?
- The breakeven for the AVAV covered call priced on this page is roughly $147.59 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 AVAV market-implied 1-standard-deviation expected move is approximately 19.82%; 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 AVAV?
- Covered calls on AVAV are an income strategy run on existing AVAV 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 AVAV implied volatility affect this covered call?
- AVAV ATM IV is at 69.13% with IV rank near 39.71%, 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.