NEON Covered Call Strategy
NEON (Neonode Inc.), in the Technology sector, (Hardware, Equipment & Parts industry), listed on NASDAQ.
Neonode Inc., together with its subsidiaries, develops optical sensing solutions for contactless touch, touch, and gesture sensing in the United States, Japan, South Korea, China, and internationally. It also offers software solutions for scene analysis using advanced machine learning algorithms to detect and track persons and objects in video streams for cameras and other types of imagers. In addition, the company licenses its technology to original equipment manufacturers (OEMs) and Tier 1 suppliers. Further, it provides embedded sensors modules to OEMs, original design manufacturers, and systems integrators; and engineering consulting services. Additionally, the company sells Neonode branded sensor products, such as AirBar products through distributors. It serves office equipment, automotive, industrial automation, medical, military, and avionics markets.
NEON (Neonode Inc.) trades in the Technology sector, specifically Hardware, Equipment & Parts, with a market capitalization of approximately $27.5M, a trailing P/E of 3.29, a beta of 1.00 versus the broader market, a 52-week range of 1.27-29.9, average daily share volume of 105K, a public-listing history dating back to 1989, approximately 40 full-time employees. These structural characteristics shape how NEON stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.00 places NEON roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 3.29 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price.
What is a covered call on NEON?
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 NEON snapshot
As of May 15, 2026, spot at $1.65, ATM IV 20.90%, IV rank 0.17%, expected move 5.99%. The covered call on NEON 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 NEON specifically: NEON IV at 20.90% is on the cheap side of its 1-year range, which means a premium-selling NEON covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 5.99% (roughly $0.10 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 NEON expiries trade a higher absolute premium for lower per-day decay. Position sizing on NEON should anchor to the underlying notional of $1.65 per share and to the trader's directional view on NEON stock.
NEON covered call setup
The NEON 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 NEON near $1.65, the first option leg uses a $1.73 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed NEON 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 NEON shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $1.65 | long |
| Sell 1 | Call | $1.73 | N/A |
NEON 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.
NEON covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on NEON. 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 NEON
Covered calls on NEON are an income strategy run on existing NEON stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
NEON thesis for this covered call
The market-implied 1-standard-deviation range for NEON extends from approximately $1.55 on the downside to $1.75 on the upside. A NEON covered call collects premium on an existing long NEON position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether NEON will breach that level within the expiration window. Current NEON IV rank near 0.17% 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 NEON at 20.90%. As a Technology name, NEON options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to NEON-specific events.
NEON 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. NEON positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move NEON alongside the broader basket even when NEON-specific fundamentals are unchanged. Short-premium structures like a covered call on NEON carry tail risk when realized volatility exceeds the implied move; review historical NEON earnings reactions and macro stress periods before sizing. Always rebuild the position from current NEON chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on NEON?
- A covered call on NEON is the covered call strategy applied to NEON (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 NEON stock trading near $1.65, the strikes shown on this page are snapped to the nearest listed NEON chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are NEON 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 NEON covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 20.90%), 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 NEON covered call?
- The breakeven for the NEON 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 NEON market-implied 1-standard-deviation expected move is approximately 5.99%; 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 NEON?
- Covered calls on NEON are an income strategy run on existing NEON 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 NEON implied volatility affect this covered call?
- NEON ATM IV is at 20.90% with IV rank near 0.17%, 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.