CHMI Covered Call Strategy
CHMI (Cherry Hill Mortgage Investment Corporation), in the Real Estate sector, (REIT - Mortgage industry), listed on NYSE.
Cherry Hill Mortgage Investment Corporation (CHMI) is a financial entity specializing in residential real estate, dedicated to the acquisition, investment, and oversight of home loan-backed assets across the United States. The company structures its operations across distinct divisions, including Investments in Residential Mortgage-Backed Securities (RMBS), Investments in Servicing Related Assets, and an "All Other" segment. It actively manages a diverse portfolio composed of both RMBS and assets linked to mortgage servicing. For federal income tax purposes, Cherry Hill Mortgage Investment Corporation holds the designation of a real estate investment trust. This status generally exempts the company from federal corporate income taxes, contingent on its distribution of at least 90% of its taxable profits to its investors. Established in 2012, CHMI is headquartered in Farmingdale, New Jersey.
CHMI (Cherry Hill Mortgage Investment Corporation) trades in the Real Estate sector, specifically REIT - Mortgage, with a market capitalization of approximately $106.2M, a trailing P/E of 5.30, a beta of 1.03 versus the broader market, a 52-week range of 2.17-3.04, average daily share volume of 202K, a public-listing history dating back to 2013, approximately 14 full-time employees. These structural characteristics shape how CHMI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.03 places CHMI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 5.30 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. CHMI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on CHMI?
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.
CHMI snapshot
As of August 14, 2026, spot at $2.94, ATM IV 22.10%, IV rank 1.30%, expected move 6.34%. The covered call on CHMI below is built from the 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 CHMI specifically: CHMI IV at 22.10% is on the cheap side of its 1-year range, which means a premium-selling CHMI covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 6.34% (roughly $0.19 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 CHMI expiries trade a higher absolute premium for lower per-day decay. Position sizing on CHMI should anchor to the underlying notional of $2.94 per share and to the trader's directional view on CHMI stock.
CHMI covered call setup
The CHMI 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 CHMI at $2.94 on that close, the first option leg uses a $3.09 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CHMI 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 CHMI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $2.94 | long |
| Sell 1 | Call | $3.09 | N/A |
CHMI covered call risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
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.
CHMI covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on CHMI. 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.
When traders use covered call on CHMI
Covered calls on CHMI are an income strategy run on existing CHMI stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
CHMI thesis for this covered call
The market-implied 1-standard-deviation range for CHMI extends from approximately $2.75 on the downside to $3.13 on the upside. A CHMI covered call collects premium on an existing long CHMI position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether CHMI will breach that level within the expiration window. Current CHMI IV rank near 1.30% 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 CHMI at 22.10%. As a Real Estate name, CHMI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CHMI-specific events.
CHMI 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. CHMI positions also carry Real Estate sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CHMI alongside the broader basket even when CHMI-specific fundamentals are unchanged. Short-premium structures like a covered call on CHMI carry tail risk when realized volatility exceeds the implied move; review historical CHMI earnings reactions and macro stress periods before sizing. Always rebuild the position from current CHMI chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on CHMI?
- A covered call on CHMI is the covered call strategy applied to CHMI (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 CHMI stock at $2.94 on the most recent close, the strikes shown on this page are snapped to the nearest listed CHMI chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are CHMI 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 CHMI covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 22.10%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CHMI covered call?
- The breakeven for the CHMI covered call priced on this page is no defined breakeven on the modeled curve at expiration, derived from the 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 CHMI market-implied 1-standard-deviation expected move in the same options snapshot is approximately 6.34%; 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 CHMI?
- Covered calls on CHMI are an income strategy run on existing CHMI 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 CHMI implied volatility affect this covered call?
- CHMI ATM IV is at 22.10% with IV rank near 1.30%, 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.