NI Covered Call Strategy
NI (NiSource Inc.), in the Utilities sector, (Regulated Gas industry), listed on NYSE.
NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. It operates through two segments, Gas Distribution Operations and Electric Operations. The company distributes natural gas to approximately 853,000 customers in northern Indiana, as well as approximately 2.4 million residential, commercial, and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. It operates approximately 54,600 miles of distribution main pipelines, as well as associated individual customer service lines; and 1,000 miles of transmission main pipelines. The company generates, transmits, and distributes electricity to approximately 483,000 customers in 20 counties in the northern part of Indiana, as well as engages in wholesale electric and transmission transactions. It owns and operates coal-fired electric generating stations with a capacity of 722 megawatts (MW) in Wheatfield and 455 MW in Michigan City; combined cycle gas turbine with a capacity of 563 MW in West Terre Haute; natural gas generating units with a capacity of 155 MW in Wheatfield; hydro generating plants with a capacity of 9 MW in Carroll County and 7 MW in White County; and wind generating units with a capacity of 102 MW and 302 MW in White County, Indiana.
NI (NiSource Inc.) trades in the Utilities sector, specifically Regulated Gas, with a market capitalization of approximately $22.56B, a trailing P/E of 23.43, a beta of 0.57 versus the broader market, a 52-week range of 38.09-48.98, average daily share volume of 4.3M, a public-listing history dating back to 1962, approximately 8K full-time employees. These structural characteristics shape how NI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.57 indicates NI has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. NI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on NI?
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 NI snapshot
As of May 15, 2026, spot at $46.44, ATM IV 22.10%, IV rank 2.80%, expected move 6.34%. The covered call on NI 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 NI specifically: NI IV at 22.10% is on the cheap side of its 1-year range, which means a premium-selling NI covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 6.34% (roughly $2.94 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 NI expiries trade a higher absolute premium for lower per-day decay. Position sizing on NI should anchor to the underlying notional of $46.44 per share and to the trader's directional view on NI stock.
NI covered call setup
The NI 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 NI near $46.44, the first option leg uses a $48.76 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed NI 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 NI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $46.44 | long |
| Sell 1 | Call | $48.76 | N/A |
NI 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.
NI covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on NI. 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 NI
Covered calls on NI are an income strategy run on existing NI stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
NI thesis for this covered call
The market-implied 1-standard-deviation range for NI extends from approximately $43.50 on the downside to $49.38 on the upside. A NI covered call collects premium on an existing long NI position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether NI will breach that level within the expiration window. Current NI IV rank near 2.80% 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 NI at 22.10%. As a Utilities name, NI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to NI-specific events.
NI 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. NI positions also carry Utilities sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move NI alongside the broader basket even when NI-specific fundamentals are unchanged. Short-premium structures like a covered call on NI carry tail risk when realized volatility exceeds the implied move; review historical NI earnings reactions and macro stress periods before sizing. Always rebuild the position from current NI chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on NI?
- A covered call on NI is the covered call strategy applied to NI (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 NI stock trading near $46.44, the strikes shown on this page are snapped to the nearest listed NI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are NI 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 NI covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 22.10%), 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 NI covered call?
- The breakeven for the NI 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 NI market-implied 1-standard-deviation expected move is approximately 6.34%; 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 NI?
- Covered calls on NI are an income strategy run on existing NI 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 NI implied volatility affect this covered call?
- NI ATM IV is at 22.10% with IV rank near 2.80%, 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.