How are STM 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 STM covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 52.47%), the computed maximum profit is $472.50 per contract and the computed maximum loss is -$5,226.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a STM covered call?

The breakeven for the STM covered call priced on this page is roughly $52.28 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The STM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 15.04%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current STM implied volatility affect this covered call?

STM ATM IV is at 52.47% with IV rank near 34.01%, 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.

STM Covered Call Strategy

STM (STMicroelectronics N.V.), in the Technology sector, (Semiconductors industry), listed on NYSE.

STMicroelectronics N.V. is a global semiconductor company that designs, develops, manufactures, and markets a broad range of semiconductor products. Its offerings include analog chips, discrete power semiconductors, microcontrollers, and sensors, with a strong presence in the automotive and industrial sectors.

STM (STMicroelectronics N.V.) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $48.36B, a trailing P/E of 104.00, a beta of 1.56 versus the broader market, a 52-week range of 21.11-81.42, average daily share volume of 12.2M, a public-listing history dating back to 1994, approximately 49K full-time employees. These structural characteristics shape how STM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.56 indicates STM 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 104.00 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. STM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a covered call on STM?

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.

STM snapshot

As of August 14, 2026, spot at $54.40, ATM IV 52.47%, IV rank 34.01%, expected move 15.04%. The covered call on STM below is built from the August 14, 2026 end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 28-day expiry.

Why this covered call structure on STM specifically: STM IV at 52.47% is mid-range versus its 1-year history, so the credit collected on a STM covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 15.04% (roughly $8.18 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated STM expiries trade a higher absolute premium for lower per-day decay. Position sizing on STM should anchor to the underlying notional of $54.40 per share and to the trader's directional view on STM stock.

STM covered call setup

The STM covered call below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With STM at $54.40 on that close, the first option leg uses a $57.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed STM chain at a 28-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 STM shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$54.40	long
Sell 1	Call	$57.00	$2.13

STM covered call risk and reward

Net Premium / Debit: -$5,227.50
Max Profit (per contract): $472.50
Max Loss (per contract): -$5,226.50
Breakeven(s): $52.28
Risk / Reward Ratio: 0.090

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.

STM covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on STM. 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	-100.0%	-$5,226.50
$12.04	-77.9%	-$4,023.80
$24.06	-55.8%	-$2,821.09
$36.09	-33.7%	-$1,618.39
$48.12	-11.5%	-$415.69
$60.15	+10.6%	+$472.50
$72.17	+32.7%	+$472.50
$84.20	+54.8%	+$472.50
$96.23	+76.9%	+$472.50
$108.25	+99.0%	+$472.50

When traders use covered call on STM

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

STM thesis for this covered call

The market-implied 1-standard-deviation range for STM extends from approximately $46.22 on the downside to $62.58 on the upside. A STM covered call collects premium on an existing long STM position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether STM will breach that level within the expiration window. Current STM IV rank near 34.01% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on STM should anchor more to the directional view and the expected-move geometry. As a Technology name, STM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to STM-specific events.

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

Frequently asked questions

What is a covered call on STM?: A covered call on STM is the covered call strategy applied to STM (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 STM stock at $54.40 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed STM chain strike and the premiums come straight from that session's bid/ask midpoint.
How are STM 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 STM covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 52.47%), the computed maximum profit is $472.50 per contract and the computed maximum loss is -$5,226.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a STM covered call?: The breakeven for the STM covered call priced on this page is roughly $52.28 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The STM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 15.04%; 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 STM?: Covered calls on STM are an income strategy run on existing STM 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 STM implied volatility affect this covered call?: STM ATM IV is at 52.47% with IV rank near 34.01%, 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.