How are MTH 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 MTH covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 40.80%), the computed maximum profit is $481.00 per contract and the computed maximum loss is -$5,768.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a MTH covered call?

The breakeven for the MTH covered call priced on this page is roughly $57.69 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 MTH market-implied 1-standard-deviation expected move is approximately 11.70%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current MTH implied volatility affect this covered call?

MTH ATM IV is at 40.80% with IV rank near 47.70%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.

MTH Covered Call Strategy

MTH (Meritage Homes Corporation), in the Consumer Cyclical sector, (Residential Construction industry), listed on NYSE.

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for first-time and first move-up buyers. The company also offers title insurance and closing/settlement services to its homebuyers. It builds and sells homes in Texas, Arizona, California, Colorado, Florida, North Carolina, South Carolina, Georgia, and Tennessee under the Meritage Homes brand name. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

MTH (Meritage Homes Corporation) trades in the Consumer Cyclical sector, specifically Residential Construction, with a market capitalization of approximately $4.11B, a trailing P/E of 10.75, a beta of 1.43 versus the broader market, a 52-week range of 58.03-84.74, average daily share volume of 962K, a public-listing history dating back to 1988, approximately 2K full-time employees. These structural characteristics shape how MTH stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.43 indicates MTH has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 10.75 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. MTH pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a covered call on MTH?

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 MTH snapshot

As of May 15, 2026, spot at $59.34, ATM IV 40.80%, IV rank 47.70%, expected move 11.70%. The covered call on MTH 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 MTH specifically: MTH IV at 40.80% is mid-range versus its 1-year history, so the credit collected on a MTH covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 11.70% (roughly $6.94 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 MTH expiries trade a higher absolute premium for lower per-day decay. Position sizing on MTH should anchor to the underlying notional of $59.34 per share and to the trader's directional view on MTH stock.

MTH covered call setup

The MTH 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 MTH near $59.34, the first option leg uses a $62.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed MTH 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 MTH shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$59.34	long
Sell 1	Call	$62.50	$1.65

MTH covered call risk and reward

Net Premium / Debit: -$5,769.00
Max Profit (per contract): $481.00
Max Loss (per contract): -$5,768.00
Breakeven(s): $57.69
Risk / Reward Ratio: 0.083

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.

MTH covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on MTH. 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%	-$5,768.00
$13.13	-77.9%	-$4,456.07
$26.25	-55.8%	-$3,144.14
$39.37	-33.7%	-$1,832.21
$52.49	-11.5%	-$520.28
$65.61	+10.6%	+$481.00
$78.73	+32.7%	+$481.00
$91.85	+54.8%	+$481.00
$104.96	+76.9%	+$481.00
$118.08	+99.0%	+$481.00

When traders use covered call on MTH

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

MTH thesis for this covered call

The market-implied 1-standard-deviation range for MTH extends from approximately $52.40 on the downside to $66.28 on the upside. A MTH covered call collects premium on an existing long MTH position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether MTH will breach that level within the expiration window. Current MTH IV rank near 47.70% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on MTH should anchor more to the directional view and the expected-move geometry. As a Consumer Cyclical name, MTH options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to MTH-specific events.

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

Frequently asked questions

What is a covered call on MTH?: A covered call on MTH is the covered call strategy applied to MTH (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 MTH stock trading near $59.34, the strikes shown on this page are snapped to the nearest listed MTH chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are MTH 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 MTH covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 40.80%), the computed maximum profit is $481.00 per contract and the computed maximum loss is -$5,768.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a MTH covered call?: The breakeven for the MTH covered call priced on this page is roughly $57.69 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 MTH market-implied 1-standard-deviation expected move is approximately 11.70%; 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 MTH?: Covered calls on MTH are an income strategy run on existing MTH 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 MTH implied volatility affect this covered call?: MTH ATM IV is at 40.80% with IV rank near 47.70%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.