SRCE Covered Call Strategy
SRCE (1st Source Corporation), in the Financial Services sector, (Banks - Regional industry), listed on NASDAQ.
As the parent company of 1st Source Bank, 1st Source Corporation delivers a comprehensive suite of financial solutions, encompassing commercial and retail banking, wealth management, and insurance offerings, to both individual and corporate customers. For individual clients, the bank provides essential services such as checking, savings, certificates of deposit, and individual retirement accounts, complemented by digital conveniences like online and mobile banking. Various lending options are available, including personal loans, home mortgages, and home equity lines of credit, along with financial planning, literacy programs, consultative support, and debit and credit card facilities. Businesses benefit from a range of financial products, including commercial, small business, agricultural, and real estate loans, which support diverse corporate needs from acquiring properties and equipment to financing accounts receivables and renewable energy projects. Additionally, the corporation provides commercial leasing, sophisticated treasury management, and retirement planning solutions. Through its wealth advisory segment, the company delivers trust, investment, agency, and custodial services, encompassing the administration of estates and personal trusts, along with the professional management of investment portfolios for individuals, employee benefit plans, and charitable organizations.
SRCE (1st Source Corporation) trades in the Financial Services sector, specifically Banks - Regional, with a market capitalization of approximately $1.97B, a trailing P/E of 12.38, a beta of 0.58 versus the broader market, a 52-week range of 56.89-86.64, average daily share volume of 139K, a public-listing history dating back to 1983, approximately 1K full-time employees. These structural characteristics shape how SRCE stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.58 indicates SRCE has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. SRCE pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on SRCE?
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 SRCE snapshot
As of June 29, 2026, spot at $81.74, ATM IV 104.20%, IV rank 20.99%, expected move 29.87%. The covered call on SRCE 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 18-day expiry.
Why this covered call structure on SRCE specifically: SRCE IV at 104.20% is on the cheap side of its 1-year range, which means a premium-selling SRCE covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 29.87% (roughly $24.42 on the underlying). The 18-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated SRCE expiries trade a higher absolute premium for lower per-day decay. Position sizing on SRCE should anchor to the underlying notional of $81.74 per share and to the trader's directional view on SRCE stock.
SRCE covered call setup
The SRCE 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 SRCE near $81.74, the first option leg uses a $85.83 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed SRCE chain at a 18-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 SRCE shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $81.74 | long |
| Sell 1 | Call | $85.83 | N/A |
SRCE 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.
SRCE covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on SRCE. 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 SRCE
Covered calls on SRCE are an income strategy run on existing SRCE stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
SRCE thesis for this covered call
The market-implied 1-standard-deviation range for SRCE extends from approximately $57.32 on the downside to $106.16 on the upside. A SRCE covered call collects premium on an existing long SRCE position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether SRCE will breach that level within the expiration window. Current SRCE IV rank near 20.99% 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 SRCE at 104.20%. As a Financial Services name, SRCE options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to SRCE-specific events.
SRCE 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. SRCE positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move SRCE alongside the broader basket even when SRCE-specific fundamentals are unchanged. Short-premium structures like a covered call on SRCE carry tail risk when realized volatility exceeds the implied move; review historical SRCE earnings reactions and macro stress periods before sizing. Always rebuild the position from current SRCE chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on SRCE?
- A covered call on SRCE is the covered call strategy applied to SRCE (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 SRCE stock trading near $81.74, the strikes shown on this page are snapped to the nearest listed SRCE chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are SRCE 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 SRCE covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 104.20%), 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 SRCE covered call?
- The breakeven for the SRCE 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 SRCE market-implied 1-standard-deviation expected move is approximately 29.87%; 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 SRCE?
- Covered calls on SRCE are an income strategy run on existing SRCE 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 SRCE implied volatility affect this covered call?
- SRCE ATM IV is at 104.20% with IV rank near 20.99%, 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.