How are RCAT 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 RCAT covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 107.07%), the computed maximum profit is $177.50 per contract and the computed maximum loss is -$971.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a RCAT covered call?

The breakeven for the RCAT covered call priced on this page is roughly $9.73 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 RCAT market-implied 1-standard-deviation expected move is approximately 30.70%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current RCAT implied volatility affect this covered call?

RCAT ATM IV is at 107.07% with IV rank near 36.27%, 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.

RCAT Covered Call Strategy

RCAT (Red Cat Holdings, Inc.), in the Technology sector, (Computer Hardware industry), listed on NASDAQ.

Red Cat Holdings, Inc. (RCAT) operates as a multifaceted provider within the drone industry, offering a comprehensive suite of products, services, and innovative solutions. The company develops and supplies unmanned aerial vehicle (UAV) technology tailored for both commercial and government sectors, addressing critical applications such as reconnaissance, public safety, and detailed inspection. Its product portfolio also includes immersive First Person View (FPV) video goggles, alongside specialized software and hardware designed to enable drones to perform inspection tasks even in environments where global positioning systems are inaccessible. Furthermore, Red Cat Holdings actively markets and sells FPV drones and related equipment, predominantly serving the consumer marketplace. The company's operations are headquartered in San Juan, Puerto Rico.

RCAT (Red Cat Holdings, Inc.) trades in the Technology sector, specifically Computer Hardware, with a market capitalization of approximately $1.00B, a beta of 1.24 versus the broader market, a 52-week range of 5.77-18.78, average daily share volume of 13.6M, a public-listing history dating back to 2002, approximately 115 full-time employees. These structural characteristics shape how RCAT stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.24 places RCAT roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a covered call on RCAT?

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 RCAT snapshot

As of June 30, 2026, spot at $10.75, ATM IV 107.07%, IV rank 36.27%, expected move 30.70%. The covered call on RCAT 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 31-day expiry.

Why this covered call structure on RCAT specifically: RCAT IV at 107.07% is mid-range versus its 1-year history, so the credit collected on a RCAT covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 30.70% (roughly $3.30 on the underlying). The 31-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated RCAT expiries trade a higher absolute premium for lower per-day decay. Position sizing on RCAT should anchor to the underlying notional of $10.75 per share and to the trader's directional view on RCAT stock.

RCAT covered call setup

The RCAT 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 RCAT near $10.75, the first option leg uses a $11.50 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RCAT chain at a 31-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 RCAT shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$10.75	long
Sell 1	Call	$11.50	$1.03

RCAT covered call risk and reward

Net Premium / Debit: -$972.50
Max Profit (per contract): $177.50
Max Loss (per contract): -$971.50
Breakeven(s): $9.73
Risk / Reward Ratio: 0.183

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.

RCAT covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on RCAT. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-99.9%	-$971.50
$2.39	-77.8%	-$733.92
$4.76	-55.7%	-$496.34
$7.14	-33.6%	-$258.77
$9.51	-11.5%	-$21.19
$11.89	+10.6%	+$177.50
$14.26	+32.7%	+$177.50
$16.64	+54.8%	+$177.50
$19.02	+76.9%	+$177.50
$21.39	+99.0%	+$177.50

When traders use covered call on RCAT

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

RCAT thesis for this covered call

The market-implied 1-standard-deviation range for RCAT extends from approximately $7.45 on the downside to $14.05 on the upside. A RCAT covered call collects premium on an existing long RCAT position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether RCAT will breach that level within the expiration window. Current RCAT IV rank near 36.27% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on RCAT should anchor more to the directional view and the expected-move geometry. As a Technology name, RCAT options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RCAT-specific events.

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

Frequently asked questions

What is a covered call on RCAT?: A covered call on RCAT is the covered call strategy applied to RCAT (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 RCAT stock trading near $10.75, the strikes shown on this page are snapped to the nearest listed RCAT chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are RCAT 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 RCAT covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 107.07%), the computed maximum profit is $177.50 per contract and the computed maximum loss is -$971.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a RCAT covered call?: The breakeven for the RCAT covered call priced on this page is roughly $9.73 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 RCAT market-implied 1-standard-deviation expected move is approximately 30.70%; 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 RCAT?: Covered calls on RCAT are an income strategy run on existing RCAT 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 RCAT implied volatility affect this covered call?: RCAT ATM IV is at 107.07% with IV rank near 36.27%, 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.