How are GME 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 GME covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 51.39%), the computed maximum profit is $189.50 per contract and the computed maximum loss is -$2,059.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a GME covered call?

The breakeven for the GME covered call priced on this page is roughly $20.61 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 GME market-implied 1-standard-deviation expected move is approximately 14.73%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current GME implied volatility affect this covered call?

GME ATM IV is at 51.39% with IV rank near 21.24%, 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.

GME Covered Call Strategy

GME (GameStop Corp.), in the Consumer Cyclical sector, (Specialty Retail industry), listed on NYSE.

GameStop Corp., a specialty retailer, provides games and entertainment products through its e-commerce properties and various stores in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, virtual reality products, and memory cards; new and pre-owned gaming software; and in-game digital currency, digital downloadable content, and full-game downloads. It also sells collectibles comprising licensed merchandise primarily related to the gaming, television, and movie industries, as well as pop culture themes. As of January 29, 2022, the company operated 4,573 stores and ecommerce sites under the GameStop, EB Games, and Micromania brands; and 50 pop culture themed stores that sell collectibles, apparel, gadgets, electronics, toys, and other retail products under the Zing Pop Culture brand, as well as offers Game Informer, a print and digital video game publication featuring reviews of new releases, previews of the big titles on the horizon, and coverage of the latest developments in the gaming industry. The company was formerly known as GSC Holdings Corp. GameStop Corp. was founded in 1996 and is headquartered in Grapevine, Texas.

GME (GameStop Corp.) trades in the Consumer Cyclical sector, specifically Specialty Retail, with a market capitalization of approximately $9.90B, a trailing P/E of 23.62, a beta of 1.83 versus the broader market, a 52-week range of 19.93-35.81, average daily share volume of 7.3M, a public-listing history dating back to 2002, approximately 6K full-time employees. These structural characteristics shape how GME stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.83 indicates GME has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.

What is a covered call on GME?

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 GME snapshot

As of May 15, 2026, spot at $21.57, ATM IV 51.39%, IV rank 21.24%, expected move 14.73%. The covered call on GME 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 GME specifically: GME IV at 51.39% is on the cheap side of its 1-year range, which means a premium-selling GME covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 14.73% (roughly $3.18 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 GME expiries trade a higher absolute premium for lower per-day decay. Position sizing on GME should anchor to the underlying notional of $21.57 per share and to the trader's directional view on GME stock.

GME covered call setup

The GME 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 GME near $21.57, the first option leg uses a $22.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed GME 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 GME shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$21.57	long
Sell 1	Call	$22.50	$0.97

GME covered call risk and reward

Net Premium / Debit: -$2,060.50
Max Profit (per contract): $189.50
Max Loss (per contract): -$2,059.50
Breakeven(s): $20.61
Risk / Reward Ratio: 0.092

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.

GME covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on GME. 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%	-$2,059.50
$4.78	-77.8%	-$1,582.69
$9.55	-55.7%	-$1,105.87
$14.31	-33.6%	-$629.06
$19.08	-11.5%	-$152.24
$23.85	+10.6%	+$189.50
$28.62	+32.7%	+$189.50
$33.39	+54.8%	+$189.50
$38.16	+76.9%	+$189.50
$42.92	+99.0%	+$189.50

When traders use covered call on GME

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

GME thesis for this covered call

The market-implied 1-standard-deviation range for GME extends from approximately $18.39 on the downside to $24.75 on the upside. A GME covered call collects premium on an existing long GME position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether GME will breach that level within the expiration window. Current GME IV rank near 21.24% 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 GME at 51.39%. As a Consumer Cyclical name, GME options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to GME-specific events.

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

Frequently asked questions

What is a covered call on GME?: A covered call on GME is the covered call strategy applied to GME (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 GME stock trading near $21.57, the strikes shown on this page are snapped to the nearest listed GME chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are GME 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 GME covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 51.39%), the computed maximum profit is $189.50 per contract and the computed maximum loss is -$2,059.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a GME covered call?: The breakeven for the GME covered call priced on this page is roughly $20.61 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 GME market-implied 1-standard-deviation expected move is approximately 14.73%; 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 GME?: Covered calls on GME are an income strategy run on existing GME 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 GME implied volatility affect this covered call?: GME ATM IV is at 51.39% with IV rank near 21.24%, 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.