How are PAGP 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 PAGP covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 18.40%), the computed maximum profit is $184.50 per contract and the computed maximum loss is -$2,414.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a PAGP covered call?

The breakeven for the PAGP covered call priced on this page is roughly $24.16 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 PAGP market-implied 1-standard-deviation expected move is approximately 5.28%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current PAGP implied volatility affect this covered call?

PAGP ATM IV is at 18.40% with IV rank near 1.62%, 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.

PAGP Covered Call Strategy

PAGP (Plains GP Holdings, L.P.), in the Energy sector, (Oil & Gas Midstream industry), listed on NASDAQ.

Plains GP Holdings, L.P., through its subsidiary, Plains All American Pipeline, L.P., owns and operates midstream energy infrastructure in the United States and Canada. The company operates in two segments, Crude Oil and Natural Gas Liquids (NGLs). The company engages in the transportation of crude oil and NGLs on pipelines, gathering systems, and trucks. As of December 31, 2021, this segment owned and leased assets comprising 18,300 miles of crude oil and NGL pipelines and gathering systems; 38 million barrels of above-ground tank capacity; and 1,275 trailers. It engages in the provision of storage, terminalling, and throughput services primarily for crude oil, NGLs, and natural gas; NGL fractionation and isomerization services; and natural gas and condensate processing services. As of December 31, 2021, this segment owned and operated approximately 74 million barrels of crude oil storage capacity; 28 million barrels of NGL storage capacity; four natural gas processing plants; a condensate processing facility; nine fractionation plants; 16 NGL rail terminals; four marine facilities; and 110 miles of pipelines.

PAGP (Plains GP Holdings, L.P.) trades in the Energy sector, specifically Oil & Gas Midstream, with a market capitalization of approximately $4.65B, a trailing P/E of 23.87, a beta of 0.43 versus the broader market, a 52-week range of 16.68-24.76, average daily share volume of 1.9M, a public-listing history dating back to 2013, approximately 5K full-time employees. These structural characteristics shape how PAGP stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.43 indicates PAGP has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. PAGP pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a covered call on PAGP?

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 PAGP snapshot

As of May 15, 2026, spot at $24.58, ATM IV 18.40%, IV rank 1.62%, expected move 5.28%. The covered call on PAGP 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 98-day expiry.

Why this covered call structure on PAGP specifically: PAGP IV at 18.40% is on the cheap side of its 1-year range, which means a premium-selling PAGP covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 5.28% (roughly $1.30 on the underlying). The 98-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated PAGP expiries trade a higher absolute premium for lower per-day decay. Position sizing on PAGP should anchor to the underlying notional of $24.58 per share and to the trader's directional view on PAGP stock.

PAGP covered call setup

The PAGP 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 PAGP near $24.58, the first option leg uses a $26.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PAGP chain at a 98-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 PAGP shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$24.58	long
Sell 1	Call	$26.00	$0.43

PAGP covered call risk and reward

Net Premium / Debit: -$2,415.50
Max Profit (per contract): $184.50
Max Loss (per contract): -$2,414.50
Breakeven(s): $24.16
Risk / Reward Ratio: 0.076

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.

PAGP covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on PAGP. 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%	-$2,414.50
$5.44	-77.9%	-$1,871.13
$10.88	-55.7%	-$1,327.77
$16.31	-33.6%	-$784.40
$21.74	-11.5%	-$241.03
$27.18	+10.6%	+$184.50
$32.61	+32.7%	+$184.50
$38.05	+54.8%	+$184.50
$43.48	+76.9%	+$184.50
$48.91	+99.0%	+$184.50

When traders use covered call on PAGP

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

PAGP thesis for this covered call

The market-implied 1-standard-deviation range for PAGP extends from approximately $23.28 on the downside to $25.88 on the upside. A PAGP covered call collects premium on an existing long PAGP position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether PAGP will breach that level within the expiration window. Current PAGP IV rank near 1.62% 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 PAGP at 18.40%. As a Energy name, PAGP options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PAGP-specific events.

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

Frequently asked questions

What is a covered call on PAGP?: A covered call on PAGP is the covered call strategy applied to PAGP (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 PAGP stock trading near $24.58, the strikes shown on this page are snapped to the nearest listed PAGP chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are PAGP 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 PAGP covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 18.40%), the computed maximum profit is $184.50 per contract and the computed maximum loss is -$2,414.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a PAGP covered call?: The breakeven for the PAGP covered call priced on this page is roughly $24.16 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 PAGP market-implied 1-standard-deviation expected move is approximately 5.28%; 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 PAGP?: Covered calls on PAGP are an income strategy run on existing PAGP 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 PAGP implied volatility affect this covered call?: PAGP ATM IV is at 18.40% with IV rank near 1.62%, 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.