BMY Covered Call Strategy
BMY (Bristol-Myers Squibb Company), in the Healthcare sector, (Drug Manufacturers - General industry), listed on NYSE.
Bristol-Myers Squibb Company discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers products for hematology, oncology, cardiovascular, immunology, fibrotic, neuroscience, and covid-19 diseases. The company's products include Revlimid, an oral immunomodulatory drug for the treatment of multiple myeloma; Eliquis, an oral inhibitor for reduction in risk of stroke/systemic embolism in NVAF, and for the treatment of DVT/PE; Opdivo for anti-cancer indications; Pomalyst/Imnovid indicated for patients with multiple myeloma; and Orencia for adult patients with active RA and psoriatic arthritis. It also provides Sprycel for the treatment of Philadelphia chromosome-positive chronic myeloid leukemia; Yervoy for the treatment of patients with unresectable or metastatic melanoma; Abraxane, a protein-bound chemotherapy product; Reblozyl for the treatment of anemia in adult patients with beta thalassemia; and Empliciti for the treatment of multiple myeloma. In addition, the company offers Zeposia to treat relapsing forms of multiple sclerosis; Breyanzi, a CD19-directed genetically modified autologous T cell immunotherapy for the treatment of adult patients with relapsed or refractory large B-cell lymphoma; Inrebic, an oral kinase inhibitor indicated for the treatment of adult patients with myelofibrosis; and Onureg for the treatment of adult patients with AML. It sells products to wholesalers, distributors, pharmacies, retailers, hospitals, clinics, and government agencies.
BMY (Bristol-Myers Squibb Company) trades in the Healthcare sector, specifically Drug Manufacturers - General, with a market capitalization of approximately $115.15B, a trailing P/E of 15.84, a beta of 0.26 versus the broader market, a 52-week range of 42.52-62.89, average daily share volume of 12.0M, a public-listing history dating back to 1972, approximately 34K full-time employees. These structural characteristics shape how BMY stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.26 indicates BMY has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. BMY pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on BMY?
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 BMY snapshot
As of May 15, 2026, spot at $56.98, ATM IV 25.91%, IV rank 28.67%, expected move 7.43%. The covered call on BMY 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 BMY specifically: BMY IV at 25.91% is on the cheap side of its 1-year range, which means a premium-selling BMY covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 7.43% (roughly $4.23 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 BMY expiries trade a higher absolute premium for lower per-day decay. Position sizing on BMY should anchor to the underlying notional of $56.98 per share and to the trader's directional view on BMY stock.
BMY covered call setup
The BMY 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 BMY near $56.98, the first option leg uses a $60.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed BMY 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 BMY shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $56.98 | long |
| Sell 1 | Call | $60.00 | $0.61 |
BMY covered call risk and reward
- Net Premium / Debit
- -$5,637.00
- Max Profit (per contract)
- $363.00
- Max Loss (per contract)
- -$5,636.00
- Breakeven(s)
- $56.37
- Risk / Reward Ratio
- 0.064
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.
BMY covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on BMY. 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% | -$5,636.00 |
| $12.61 | -77.9% | -$4,376.25 |
| $25.20 | -55.8% | -$3,116.50 |
| $37.80 | -33.7% | -$1,856.75 |
| $50.40 | -11.5% | -$597.01 |
| $63.00 | +10.6% | +$363.00 |
| $75.59 | +32.7% | +$363.00 |
| $88.19 | +54.8% | +$363.00 |
| $100.79 | +76.9% | +$363.00 |
| $113.39 | +99.0% | +$363.00 |
When traders use covered call on BMY
Covered calls on BMY are an income strategy run on existing BMY stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
BMY thesis for this covered call
The market-implied 1-standard-deviation range for BMY extends from approximately $52.75 on the downside to $61.21 on the upside. A BMY covered call collects premium on an existing long BMY position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether BMY will breach that level within the expiration window. Current BMY IV rank near 28.67% 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 BMY at 25.91%. As a Healthcare name, BMY options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to BMY-specific events.
BMY 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. BMY positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move BMY alongside the broader basket even when BMY-specific fundamentals are unchanged. Short-premium structures like a covered call on BMY carry tail risk when realized volatility exceeds the implied move; review historical BMY earnings reactions and macro stress periods before sizing. Always rebuild the position from current BMY chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on BMY?
- A covered call on BMY is the covered call strategy applied to BMY (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 BMY stock trading near $56.98, the strikes shown on this page are snapped to the nearest listed BMY chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are BMY 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 BMY covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 25.91%), the computed maximum profit is $363.00 per contract and the computed maximum loss is -$5,636.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a BMY covered call?
- The breakeven for the BMY covered call priced on this page is roughly $56.37 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 BMY market-implied 1-standard-deviation expected move is approximately 7.43%; 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 BMY?
- Covered calls on BMY are an income strategy run on existing BMY 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 BMY implied volatility affect this covered call?
- BMY ATM IV is at 25.91% with IV rank near 28.67%, 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.