KRP Covered Call Strategy
KRP (Kimbell Royalty Partners, LP), in the Energy sector, (Oil & Gas Exploration & Production industry), listed on NYSE.
Kimbell Royalty Partners, LP (KRP) and its affiliates are dedicated to acquiring and owning mineral and royalty interests in crude oil and natural gas properties across the United States. As of December 31, 2021, its comprehensive portfolio included approximately 11.4 million gross acres of mineral and royalty interests, alongside an additional 4.7 million gross acres representing overriding royalty interests. These holdings are geographically widespread, covering 28 states, and encompass ownership stakes in an estimated 122,000 gross wells. Notably, a significant portion of these — around 46,000 wells — are located within the highly productive Permian Basin. Kimbell Royalty Partners itself fulfills the role of general partner. The firm was established in 2013 and maintains its corporate headquarters in Fort Worth, Texas.
KRP (Kimbell Royalty Partners, LP) trades in the Energy sector, specifically Oil & Gas Exploration & Production, with a market capitalization of approximately $1.50B, a trailing P/E of 16.43, a beta of 0.28 versus the broader market, a 52-week range of 11.31-15.8, average daily share volume of 792K, a public-listing history dating back to 2017, approximately 29 full-time employees. These structural characteristics shape how KRP stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.28 indicates KRP has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. KRP pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on KRP?
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.
KRP snapshot
As of August 14, 2026, spot at $15.14, ATM IV 470.10%, IV rank 99.60%, expected move 134.77%. The covered call on KRP 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 KRP specifically: KRP IV at 470.10% is rich versus its 1-year range, which favors premium-selling structures like a KRP covered call, with a market-implied 1-standard-deviation move of approximately 134.77% (roughly $20.40 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 KRP expiries trade a higher absolute premium for lower per-day decay. Position sizing on KRP should anchor to the underlying notional of $15.14 per share and to the trader's directional view on KRP stock.
KRP covered call setup
The KRP 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 KRP at $15.14 on that close, the first option leg uses a $15.90 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed KRP 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 KRP shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $15.14 | long |
| Sell 1 | Call | $15.90 | N/A |
KRP 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.
KRP covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on KRP. 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 KRP
Covered calls on KRP are an income strategy run on existing KRP stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
KRP thesis for this covered call
The market-implied 1-standard-deviation range for KRP extends from approximately $-5.26 on the downside to $35.54 on the upside. A KRP covered call collects premium on an existing long KRP position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether KRP will breach that level within the expiration window. Current KRP IV rank near 99.60% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on KRP at 470.10%. As a Energy name, KRP options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to KRP-specific events.
KRP 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. KRP positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move KRP alongside the broader basket even when KRP-specific fundamentals are unchanged. Short-premium structures like a covered call on KRP carry tail risk when realized volatility exceeds the implied move; review historical KRP earnings reactions and macro stress periods before sizing. Always rebuild the position from current KRP chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on KRP?
- A covered call on KRP is the covered call strategy applied to KRP (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 KRP stock at $15.14 on the most recent close, the strikes shown on this page are snapped to the nearest listed KRP chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are KRP 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 KRP covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 470.10%), 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 KRP covered call?
- The breakeven for the KRP 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 KRP market-implied 1-standard-deviation expected move in the same options snapshot is approximately 134.77%; 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 KRP?
- Covered calls on KRP are an income strategy run on existing KRP 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 KRP implied volatility affect this covered call?
- KRP ATM IV is at 470.10% with IV rank near 99.60%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.