PGY Covered Call Strategy
PGY (Pagaya Technologies Ltd.), in the Technology sector, (Software - Infrastructure industry), listed on NASDAQ.
Pagaya Technologies Ltd. operates as a financial technology company in Israel, the United States, and the Cayman Islands. It develops and implements proprietary artificial intelligence technology and related software solutions to assist partners to originate loans and other assets. Its partners include high-growth financial technology companies, incumbent financial institutions, auto finance providers, and brokers. The company was founded in 2016 and is headquartered in Tel Aviv, Israel.
PGY (Pagaya Technologies Ltd.) trades in the Technology sector, specifically Software - Infrastructure, with a market capitalization of approximately $1.09B, a trailing P/E of 11.82, a beta of 5.44 versus the broader market, a 52-week range of 10.4-44.99, average daily share volume of 3.4M, a public-listing history dating back to 2021, approximately 527 full-time employees. These structural characteristics shape how PGY stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 5.44 indicates PGY 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 11.82 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 PGY?
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 PGY snapshot
As of May 15, 2026, spot at $13.54, ATM IV 73.90%, IV rank 28.26%, expected move 21.19%. The covered call on PGY 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 PGY specifically: PGY IV at 73.90% is on the cheap side of its 1-year range, which means a premium-selling PGY covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 21.19% (roughly $2.87 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 PGY expiries trade a higher absolute premium for lower per-day decay. Position sizing on PGY should anchor to the underlying notional of $13.54 per share and to the trader's directional view on PGY stock.
PGY covered call setup
The PGY 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 PGY near $13.54, the first option leg uses a $14.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed PGY 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 PGY shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $13.54 | long |
| Sell 1 | Call | $14.00 | $2.18 |
PGY covered call risk and reward
- Net Premium / Debit
- -$1,136.50
- Max Profit (per contract)
- $263.50
- Max Loss (per contract)
- -$1,135.50
- Breakeven(s)
- $11.37
- Risk / Reward Ratio
- 0.232
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.
PGY covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on PGY. 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 | -99.9% | -$1,135.50 |
| $3.00 | -77.8% | -$836.23 |
| $6.00 | -55.7% | -$536.97 |
| $8.99 | -33.6% | -$237.70 |
| $11.98 | -11.5% | +$61.57 |
| $14.97 | +10.6% | +$263.50 |
| $17.97 | +32.7% | +$263.50 |
| $20.96 | +54.8% | +$263.50 |
| $23.95 | +76.9% | +$263.50 |
| $26.94 | +99.0% | +$263.50 |
When traders use covered call on PGY
Covered calls on PGY are an income strategy run on existing PGY stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
PGY thesis for this covered call
The market-implied 1-standard-deviation range for PGY extends from approximately $10.67 on the downside to $16.41 on the upside. A PGY covered call collects premium on an existing long PGY position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether PGY will breach that level within the expiration window. Current PGY IV rank near 28.26% 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 PGY at 73.90%. As a Technology name, PGY options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to PGY-specific events.
PGY 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. PGY positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move PGY alongside the broader basket even when PGY-specific fundamentals are unchanged. Short-premium structures like a covered call on PGY carry tail risk when realized volatility exceeds the implied move; review historical PGY earnings reactions and macro stress periods before sizing. Always rebuild the position from current PGY chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on PGY?
- A covered call on PGY is the covered call strategy applied to PGY (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 PGY stock trading near $13.54, the strikes shown on this page are snapped to the nearest listed PGY chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are PGY 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 PGY covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 73.90%), the computed maximum profit is $263.50 per contract and the computed maximum loss is -$1,135.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a PGY covered call?
- The breakeven for the PGY covered call priced on this page is roughly $11.37 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 PGY market-implied 1-standard-deviation expected move is approximately 21.19%; 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 PGY?
- Covered calls on PGY are an income strategy run on existing PGY 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 PGY implied volatility affect this covered call?
- PGY ATM IV is at 73.90% with IV rank near 28.26%, 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.