CHDN Covered Call Strategy
CHDN (Churchill Downs Incorporated), in the Consumer Cyclical sector, (Gambling, Resorts & Casinos industry), listed on NASDAQ.
Churchill Downs Incorporated operates as a racing, online wagering, and gaming entertainment company in the United States. It operates through three segments: Live and Historical Racing, TwinSpires, and Gaming. As of December 31, 2021, the company owned and operated three pari-mutuel gaming entertainment venues with approximately 3,050 historical racing machines (HRMs) in Kentucky; TwinSpires, an online wagering platform for horse racing, sports, and iGaming; nine retail sportsbooks; and casino gaming in eight states with approximately 11,000 slot machines and video lottery terminals, and 200 table games. It also offers streaming video of live horse races, replays, and an assortment of racing and handicapping information; and provides the Bloodstock Research Information Services platform for horse racing statistical data. In addition, the company manufactures and operates pari-mutuel wagering systems for racetracks, off-track betting facilities, and other pari-mutuel wagering businesses. Churchill Downs Incorporated was founded in 1875 and is headquartered in Louisville, Kentucky.
CHDN (Churchill Downs Incorporated) trades in the Consumer Cyclical sector, specifically Gambling, Resorts & Casinos, with a market capitalization of approximately $5.96B, a trailing P/E of 15.53, a beta of 0.73 versus the broader market, a 52-week range of 80.24-118.46, average daily share volume of 1.1M, a public-listing history dating back to 1993, approximately 6K full-time employees. These structural characteristics shape how CHDN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.73 places CHDN roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. CHDN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on CHDN?
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 CHDN snapshot
As of May 15, 2026, spot at $86.65, ATM IV 34.20%, IV rank 51.47%, expected move 9.80%. The covered call on CHDN 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 CHDN specifically: CHDN IV at 34.20% is mid-range versus its 1-year history, so the credit collected on a CHDN covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 9.80% (roughly $8.50 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 CHDN expiries trade a higher absolute premium for lower per-day decay. Position sizing on CHDN should anchor to the underlying notional of $86.65 per share and to the trader's directional view on CHDN stock.
CHDN covered call setup
The CHDN 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 CHDN near $86.65, the first option leg uses a $90.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CHDN 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 CHDN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $86.65 | long |
| Sell 1 | Call | $90.00 | $2.50 |
CHDN covered call risk and reward
- Net Premium / Debit
- -$8,415.00
- Max Profit (per contract)
- $585.00
- Max Loss (per contract)
- -$8,414.00
- Breakeven(s)
- $84.15
- Risk / Reward Ratio
- 0.070
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.
CHDN covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on CHDN. 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% | -$8,414.00 |
| $19.17 | -77.9% | -$6,498.23 |
| $38.33 | -55.8% | -$4,582.46 |
| $57.48 | -33.7% | -$2,666.69 |
| $76.64 | -11.6% | -$750.92 |
| $95.80 | +10.6% | +$585.00 |
| $114.96 | +32.7% | +$585.00 |
| $134.11 | +54.8% | +$585.00 |
| $153.27 | +76.9% | +$585.00 |
| $172.43 | +99.0% | +$585.00 |
When traders use covered call on CHDN
Covered calls on CHDN are an income strategy run on existing CHDN stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
CHDN thesis for this covered call
The market-implied 1-standard-deviation range for CHDN extends from approximately $78.15 on the downside to $95.15 on the upside. A CHDN covered call collects premium on an existing long CHDN position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether CHDN will breach that level within the expiration window. Current CHDN IV rank near 51.47% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on CHDN should anchor more to the directional view and the expected-move geometry. As a Consumer Cyclical name, CHDN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CHDN-specific events.
CHDN 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. CHDN positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CHDN alongside the broader basket even when CHDN-specific fundamentals are unchanged. Short-premium structures like a covered call on CHDN carry tail risk when realized volatility exceeds the implied move; review historical CHDN earnings reactions and macro stress periods before sizing. Always rebuild the position from current CHDN chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on CHDN?
- A covered call on CHDN is the covered call strategy applied to CHDN (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 CHDN stock trading near $86.65, the strikes shown on this page are snapped to the nearest listed CHDN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are CHDN 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 CHDN covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 34.20%), the computed maximum profit is $585.00 per contract and the computed maximum loss is -$8,414.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CHDN covered call?
- The breakeven for the CHDN covered call priced on this page is roughly $84.15 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 CHDN market-implied 1-standard-deviation expected move is approximately 9.80%; 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 CHDN?
- Covered calls on CHDN are an income strategy run on existing CHDN 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 CHDN implied volatility affect this covered call?
- CHDN ATM IV is at 34.20% with IV rank near 51.47%, 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.