How are CARG 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 CARG covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 42.40%), the computed maximum profit is $364.00 per contract and the computed maximum loss is -$3,535.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a CARG covered call?

The breakeven for the CARG covered call priced on this page is roughly $35.36 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The CARG market-implied 1-standard-deviation expected move in the same options snapshot is approximately 12.16%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current CARG implied volatility affect this covered call?

CARG ATM IV is at 42.40% with IV rank near 20.55%, 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.

CARG Covered Call Strategy

CARG (CarGurus, Inc.), in the Consumer Cyclical sector, (Auto - Dealerships industry), listed on NASDAQ.

CarGurus, Inc., established in Boston, Massachusetts, in 2005, manages a prominent online ecosystem for vehicle transactions, serving both buyers and sellers across the United States and internationally. The company's operations are divided into two main segments: the U.S. Marketplace and Digital Wholesale. Essentially, CarGurus offers an expansive digital automotive marketplace where individuals can search for new and pre-owned vehicle listings from numerous dealerships. Simultaneously, it empowers dealers by linking them with a vast, engaged consumer base and supplying them with practical, data-driven market intelligence. The platform provides an array of specialized features to simplify the car buying and selling journey.

CARG (CarGurus, Inc.) trades in the Consumer Cyclical sector, specifically Auto - Dealerships, with a market capitalization of approximately $3.56B, a trailing P/E of 18.89, a beta of 1.18 versus the broader market, a 52-week range of 26.39-41.22, average daily share volume of 1.3M, a public-listing history dating back to 2017, approximately 1K full-time employees. These structural characteristics shape how CARG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.18 places CARG roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a covered call on CARG?

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.

CARG snapshot

As of August 14, 2026, spot at $37.16, ATM IV 42.40%, IV rank 20.55%, expected move 12.16%. The covered call on CARG below is built from the August 14, 2026 end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 35-day expiry.

Why this covered call structure on CARG specifically: CARG IV at 42.40% is on the cheap side of its 1-year range, which means a premium-selling CARG covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 12.16% (roughly $4.52 on the underlying). The 35-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated CARG expiries trade a higher absolute premium for lower per-day decay. Position sizing on CARG should anchor to the underlying notional of $37.16 per share and to the trader's directional view on CARG stock.

CARG covered call setup

The CARG covered call below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With CARG at $37.16 on that close, the first option leg uses a $39.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CARG chain at a 35-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 CARG shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$37.16	long
Sell 1	Call	$39.00	$1.80

CARG covered call risk and reward

Net Premium / Debit: -$3,536.00
Max Profit (per contract): $364.00
Max Loss (per contract): -$3,535.00
Breakeven(s): $35.36
Risk / Reward Ratio: 0.103

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.

CARG covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on CARG. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$3,535.00
$8.23	-77.9%	-$2,713.48
$16.44	-55.8%	-$1,891.96
$24.66	-33.7%	-$1,070.45
$32.87	-11.5%	-$248.93
$41.09	+10.6%	+$364.00
$49.30	+32.7%	+$364.00
$57.52	+54.8%	+$364.00
$65.73	+76.9%	+$364.00
$73.95	+99.0%	+$364.00

When traders use covered call on CARG

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

CARG thesis for this covered call

The market-implied 1-standard-deviation range for CARG extends from approximately $32.64 on the downside to $41.68 on the upside. A CARG covered call collects premium on an existing long CARG position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether CARG will breach that level within the expiration window. Current CARG IV rank near 20.55% 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 CARG at 42.40%. As a Consumer Cyclical name, CARG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CARG-specific events.

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

Frequently asked questions

What is a covered call on CARG?: A covered call on CARG is the covered call strategy applied to CARG (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 CARG stock at $37.16 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed CARG chain strike and the premiums come straight from that session's bid/ask midpoint.
How are CARG 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 CARG covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 42.40%), the computed maximum profit is $364.00 per contract and the computed maximum loss is -$3,535.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a CARG covered call?: The breakeven for the CARG covered call priced on this page is roughly $35.36 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The CARG market-implied 1-standard-deviation expected move in the same options snapshot is approximately 12.16%; 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 CARG?: Covered calls on CARG are an income strategy run on existing CARG 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 CARG implied volatility affect this covered call?: CARG ATM IV is at 42.40% with IV rank near 20.55%, 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.