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, a residential real estate finance company, acquires, invests in, and manages residential mortgage assets in the United States. The company operates through Investments in RMBS (residential mortgage-backed securities), Investments in Servicing Related Assets, and All Other segments. It manages a portfolio of servicing related assets and RMBS. Cherry Hill Mortgage Investment Corporation qualifies as a real estate investment trust for federal income tax purposes. The company generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. Cherry Hill Mortgage Investment Corporation was incorporated in 2012 and is based 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 $92.6M, a trailing P/E of 4.27, a beta of 1.07 versus the broader market, a 52-week range of 2.17-3.12, average daily share volume of 188K, a public-listing history dating back to 2013, approximately 12 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 1.07 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 4.27 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.
Current CHMI snapshot
As of May 15, 2026, spot at $2.41, ATM IV 43.00%, IV rank 4.57%, expected move 11.47%. The covered call on CHMI 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 CHMI specifically: CHMI IV at 43.00% 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 11.47% (roughly $0.28 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 CHMI expiries trade a higher absolute premium for lower per-day decay. Position sizing on CHMI should anchor to the underlying notional of $2.41 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 near $2.41, the first option leg uses a $2.53 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 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 CHMI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $2.41 | long |
| Sell 1 | Call | $2.53 | 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 $2.13 on the downside to $2.69 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 4.57% 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 43.00%. 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 trading near $2.41, the strikes shown on this page are snapped to the nearest listed CHMI chain strike and the premiums come straight from the end-of-day 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 43.00%), 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 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 CHMI market-implied 1-standard-deviation expected move is approximately 11.47%; 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 43.00% with IV rank near 4.57%, 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.