How are BMI 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 BMI covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 39.70%), the computed maximum profit is $946.00 per contract and the computed maximum loss is -$11,053.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a BMI covered call?

The breakeven for the BMI covered call priced on this page is roughly $110.54 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 BMI market-implied 1-standard-deviation expected move is approximately 11.38%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current BMI implied volatility affect this covered call?

BMI ATM IV is at 39.70% with IV rank near 34.29%, 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.

BMI Covered Call Strategy

BMI (Badger Meter, Inc.), in the Technology sector, (Hardware, Equipment & Parts industry), listed on NYSE.

Badger Meter, Inc. manufactures and markets flow measurement, quality, control, and communication solutions in the United States, Asia, Canada, Europe, Mexico, the Middle East, and internationally. It offers mechanical or static water meters, and related radio and software technologies and services to municipal water utilities. The company also provides flow instrumentation products, including meters, valves, and other sensing instruments to measure and control fluids going through a pipe or pipeline, including water, air, steam, oil, and other liquids and gases to original equipment manufacturers as the primary flow measurement device within a product or system, as well as through manufacturers' representatives. Its flow instrumentation products are used in water/wastewater, heating, ventilating and air conditioning, and corporate sustainability markets. In addition, the company offers ORION Migratable for automatic meter reading; ORION (SE) for traditional fixed network applications; and ORION Cellular for infrastructure-free fixed network meter reading solution, as well as BEACON advanced metering analytics, a secure cloud-hosted software suite that establishes alerts for specific conditions and allows consumer engagement tools that permit end water customers to view and manage their water usage activity. It also serves water utilities, industrial, and other industries.

BMI (Badger Meter, Inc.) trades in the Technology sector, specifically Hardware, Equipment & Parts, with a market capitalization of approximately $3.39B, a trailing P/E of 25.97, a beta of 0.68 versus the broader market, a 52-week range of 112.09-256.08, average daily share volume of 554K, a public-listing history dating back to 1983, approximately 2K full-time employees. These structural characteristics shape how BMI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.68 indicates BMI has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. BMI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a covered call on BMI?

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 BMI snapshot

As of May 15, 2026, spot at $114.59, ATM IV 39.70%, IV rank 34.29%, expected move 11.38%. The covered call on BMI 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 BMI specifically: BMI IV at 39.70% is mid-range versus its 1-year history, so the credit collected on a BMI covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 11.38% (roughly $13.04 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 BMI expiries trade a higher absolute premium for lower per-day decay. Position sizing on BMI should anchor to the underlying notional of $114.59 per share and to the trader's directional view on BMI stock.

BMI covered call setup

The BMI 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 BMI near $114.59, the first option leg uses a $120.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed BMI 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 BMI shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$114.59	long
Sell 1	Call	$120.00	$4.05

BMI covered call risk and reward

Net Premium / Debit: -$11,054.00
Max Profit (per contract): $946.00
Max Loss (per contract): -$11,053.00
Breakeven(s): $110.54
Risk / Reward Ratio: 0.086

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.

BMI covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on BMI. 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%	-$11,053.00
$25.35	-77.9%	-$8,519.46
$50.68	-55.8%	-$5,985.92
$76.02	-33.7%	-$3,452.39
$101.35	-11.6%	-$918.85
$126.69	+10.6%	+$946.00
$152.02	+32.7%	+$946.00
$177.36	+54.8%	+$946.00
$202.69	+76.9%	+$946.00
$228.03	+99.0%	+$946.00

When traders use covered call on BMI

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

BMI thesis for this covered call

The market-implied 1-standard-deviation range for BMI extends from approximately $101.55 on the downside to $127.63 on the upside. A BMI covered call collects premium on an existing long BMI position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether BMI will breach that level within the expiration window. Current BMI IV rank near 34.29% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on BMI should anchor more to the directional view and the expected-move geometry. As a Technology name, BMI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to BMI-specific events.

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

Frequently asked questions

What is a covered call on BMI?: A covered call on BMI is the covered call strategy applied to BMI (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 BMI stock trading near $114.59, the strikes shown on this page are snapped to the nearest listed BMI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are BMI 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 BMI covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 39.70%), the computed maximum profit is $946.00 per contract and the computed maximum loss is -$11,053.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a BMI covered call?: The breakeven for the BMI covered call priced on this page is roughly $110.54 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 BMI market-implied 1-standard-deviation expected move is approximately 11.38%; 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 BMI?: Covered calls on BMI are an income strategy run on existing BMI 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 BMI implied volatility affect this covered call?: BMI ATM IV is at 39.70% with IV rank near 34.29%, 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.