SGU Covered Call Strategy
SGU (Star Group, L.P.), in the Energy sector, (Oil & Gas Refining & Marketing industry), listed on NYSE.
Star Group, L.P. sells home heating and air conditioning products and services to residential and commercial home heating oil and propane customers in the United States. It also sells diesel fuel, gasoline, and home heating oil on a delivery only basis, as well as provide plumbing services; and installs maintains, and repairs heating and air conditioning equipment. As of September 30, 2021, the company served approximately 422,200 full service residential and commercial home heating oil and propane customers and 71,100 customers on a delivery only basis. It also sells gasoline and diesel fuel to approximately 26,700 customers. Kestrel Heat, LLC operates as the general partner of the company. The company was formerly known as Star Gas Partners, L.P. and changed its name to Star Group, L.P. in October 2017.
SGU (Star Group, L.P.) trades in the Energy sector, specifically Oil & Gas Refining & Marketing, with a market capitalization of approximately $419.6M, a trailing P/E of 4.01, a beta of 0.33 versus the broader market, a 52-week range of 11.31-13.53, average daily share volume of 25K, a public-listing history dating back to 1995, approximately 3K full-time employees. These structural characteristics shape how SGU stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.33 indicates SGU has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. The trailing P/E of 4.01 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. SGU pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on SGU?
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 SGU snapshot
As of May 15, 2026, spot at $12.70, ATM IV 406.10%, IV rank 82.11%, expected move 116.42%. The covered call on SGU 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 SGU specifically: SGU IV at 406.10% is rich versus its 1-year range, which favors premium-selling structures like a SGU covered call, with a market-implied 1-standard-deviation move of approximately 116.42% (roughly $14.79 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 SGU expiries trade a higher absolute premium for lower per-day decay. Position sizing on SGU should anchor to the underlying notional of $12.70 per share and to the trader's directional view on SGU stock.
SGU covered call setup
The SGU 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 SGU near $12.70, the first option leg uses a $13.33 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SGU 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 SGU shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $12.70 | long |
| Sell 1 | Call | $13.33 | N/A |
SGU 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.
SGU covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on SGU. 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 SGU
Covered calls on SGU are an income strategy run on existing SGU stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
SGU thesis for this covered call
The market-implied 1-standard-deviation range for SGU extends from approximately $-2.09 on the downside to $27.49 on the upside. A SGU covered call collects premium on an existing long SGU position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether SGU will breach that level within the expiration window. Current SGU IV rank near 82.11% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on SGU at 406.10%. As a Energy name, SGU options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SGU-specific events.
SGU 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. SGU positions also carry Energy sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SGU alongside the broader basket even when SGU-specific fundamentals are unchanged. Short-premium structures like a covered call on SGU carry tail risk when realized volatility exceeds the implied move; review historical SGU earnings reactions and macro stress periods before sizing. Always rebuild the position from current SGU chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on SGU?
- A covered call on SGU is the covered call strategy applied to SGU (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 SGU stock trading near $12.70, the strikes shown on this page are snapped to the nearest listed SGU chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SGU 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 SGU covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 406.10%), 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 SGU covered call?
- The breakeven for the SGU 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 SGU market-implied 1-standard-deviation expected move is approximately 116.42%; 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 SGU?
- Covered calls on SGU are an income strategy run on existing SGU 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 SGU implied volatility affect this covered call?
- SGU ATM IV is at 406.10% with IV rank near 82.11%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.