MED Covered Call Strategy
MED (Medifast, Inc.), in the Consumer Cyclical sector, (Personal Products & Services industry), listed on NYSE.
Medifast, Inc., through its subsidiaries, manufactures and distributes weight loss, weight management, healthy living products, and other consumable health and nutritional products in the United States and the Asia-Pacific. The company offers bars, bites, pretzels, puffs, cereal crunch, drinks, hearty choices, oatmeal, pancakes, pudding, soft serves, shakes, smoothies, soft bakes, and soups under the OPTAVIA, Optimal Health by Take Shape for Life, and Flavors of Home brands. It markets its products through point-of-sale transactions over ecommerce platform. The company was founded in 1980 and is headquartered in Baltimore, Maryland.
MED (Medifast, Inc.) trades in the Consumer Cyclical sector, specifically Personal Products & Services, with a market capitalization of approximately $138.8M, a beta of 0.57 versus the broader market, a 52-week range of 9.22-15.46, average daily share volume of 255K, a public-listing history dating back to 1993, approximately 504 full-time employees. These structural characteristics shape how MED stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.57 indicates MED has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a covered call on MED?
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 MED snapshot
As of May 15, 2026, spot at $12.59, ATM IV 17.50%, IV rank 0.49%, expected move 5.02%. The covered call on MED 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 MED specifically: MED IV at 17.50% is on the cheap side of its 1-year range, which means a premium-selling MED covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 5.02% (roughly $0.63 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 MED expiries trade a higher absolute premium for lower per-day decay. Position sizing on MED should anchor to the underlying notional of $12.59 per share and to the trader's directional view on MED stock.
MED covered call setup
The MED 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 MED near $12.59, the first option leg uses a $13.22 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed MED 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 MED shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $12.59 | long |
| Sell 1 | Call | $13.22 | N/A |
MED 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.
MED covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on MED. 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 MED
Covered calls on MED are an income strategy run on existing MED stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
MED thesis for this covered call
The market-implied 1-standard-deviation range for MED extends from approximately $11.96 on the downside to $13.22 on the upside. A MED covered call collects premium on an existing long MED position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether MED will breach that level within the expiration window. Current MED IV rank near 0.49% 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 MED at 17.50%. As a Consumer Cyclical name, MED options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to MED-specific events.
MED 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. MED positions also carry Consumer Cyclical sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move MED alongside the broader basket even when MED-specific fundamentals are unchanged. Short-premium structures like a covered call on MED carry tail risk when realized volatility exceeds the implied move; review historical MED earnings reactions and macro stress periods before sizing. Always rebuild the position from current MED chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on MED?
- A covered call on MED is the covered call strategy applied to MED (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 MED stock trading near $12.59, the strikes shown on this page are snapped to the nearest listed MED chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are MED 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 MED covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 17.50%), 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 MED covered call?
- The breakeven for the MED 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 MED market-implied 1-standard-deviation expected move is approximately 5.02%; 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 MED?
- Covered calls on MED are an income strategy run on existing MED 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 MED implied volatility affect this covered call?
- MED ATM IV is at 17.50% with IV rank near 0.49%, 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.