RDN Covered Call Strategy
RDN (Radian Group Inc.), in the Financial Services sector, (Insurance - Specialty industry), listed on NYSE.
Operating across the United States, Radian Group Inc. and its various subsidiaries are key players in the mortgage and real estate services sector. Through its Mortgage segment, the company delivers crucial credit-related insurance, predominantly private mortgage insurance for primary residential loans. This division also furnishes a suite of credit risk management, contract underwriting, and fulfillment services. Its principal clientele includes a broad spectrum of mortgage originators, ranging from large mortgage and commercial banks to savings institutions, credit unions, and community banks. Radian's Homegenius segment provides an extensive array of services. These encompass comprehensive title services, such as both insured and uninsured title solutions, tax and title data management, centralized document recording, retrieval, and default curative actions, along with deed and property reports.
RDN (Radian Group Inc.) trades in the Financial Services sector, specifically Insurance - Specialty, with a market capitalization of approximately $4.99B, a trailing P/E of 9.14, a beta of 0.74 versus the broader market, a 52-week range of 31.5-38.84, average daily share volume of 1.2M, a public-listing history dating back to 1992, approximately 1K full-time employees. These structural characteristics shape how RDN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.74 places RDN roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 9.14 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. RDN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on RDN?
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 RDN snapshot
As of June 30, 2026, spot at $37.78, ATM IV 19.60%, IV rank 2.15%, expected move 5.62%. The covered call on RDN 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 52-day expiry.
Why this covered call structure on RDN specifically: RDN IV at 19.60% is on the cheap side of its 1-year range, which means a premium-selling RDN covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 5.62% (roughly $2.12 on the underlying). The 52-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated RDN expiries trade a higher absolute premium for lower per-day decay. Position sizing on RDN should anchor to the underlying notional of $37.78 per share and to the trader's directional view on RDN stock.
RDN covered call setup
The RDN 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 RDN near $37.78, the first option leg uses a $40.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed RDN chain at a 52-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 RDN shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $37.78 | long |
| Sell 1 | Call | $40.00 | $0.92 |
RDN covered call risk and reward
- Net Premium / Debit
- -$3,686.00
- Max Profit (per contract)
- $314.00
- Max Loss (per contract)
- -$3,685.00
- Breakeven(s)
- $36.86
- Risk / Reward Ratio
- 0.085
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.
RDN covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on RDN. 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% | -$3,685.00 |
| $8.36 | -77.9% | -$2,849.77 |
| $16.71 | -55.8% | -$2,014.55 |
| $25.07 | -33.7% | -$1,179.32 |
| $33.42 | -11.5% | -$344.10 |
| $41.77 | +10.6% | +$314.00 |
| $50.12 | +32.7% | +$314.00 |
| $58.48 | +54.8% | +$314.00 |
| $66.83 | +76.9% | +$314.00 |
| $75.18 | +99.0% | +$314.00 |
When traders use covered call on RDN
Covered calls on RDN are an income strategy run on existing RDN stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
RDN thesis for this covered call
The market-implied 1-standard-deviation range for RDN extends from approximately $35.66 on the downside to $39.90 on the upside. A RDN covered call collects premium on an existing long RDN position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether RDN will breach that level within the expiration window. Current RDN IV rank near 2.15% 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 RDN at 19.60%. As a Financial Services name, RDN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to RDN-specific events.
RDN 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. RDN positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move RDN alongside the broader basket even when RDN-specific fundamentals are unchanged. Short-premium structures like a covered call on RDN carry tail risk when realized volatility exceeds the implied move; review historical RDN earnings reactions and macro stress periods before sizing. Always rebuild the position from current RDN chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on RDN?
- A covered call on RDN is the covered call strategy applied to RDN (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 RDN stock trading near $37.78, the strikes shown on this page are snapped to the nearest listed RDN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are RDN 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 RDN covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 19.60%), the computed maximum profit is $314.00 per contract and the computed maximum loss is -$3,685.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a RDN covered call?
- The breakeven for the RDN covered call priced on this page is roughly $36.86 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 RDN market-implied 1-standard-deviation expected move is approximately 5.62%; 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 RDN?
- Covered calls on RDN are an income strategy run on existing RDN 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 RDN implied volatility affect this covered call?
- RDN ATM IV is at 19.60% with IV rank near 2.15%, 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.