STRO Covered Call Strategy
STRO (Sutro Biopharma, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Sutro Biopharma, Inc. operates as clinical stage drug discovery, development, and manufacturing company. It focuses on creating protein therapeutics for cancer and autoimmune disorders through integrated cell-free protein synthesis and site-specific conjugation platform, XpressCF+.The company's product candidates include STRO-001, an antibody-drug conjugate (ADC) directed against the cancer target CD74 for patients with multiple myeloma and non-Hodgkin lymphoma that is in Phase 1 clinical trials; and STRO-002, an ADC directed against folate receptor-alpha for patients with ovarian and endometrial cancers, which is in Phase 1 clinical trials. It has collaboration and license agreements with Merck Collaboration to develop research programs focusing on cytokine derivatives for cancer and autoimmune disorders; and Celgene Corporation to discover and develop bispecific antibodies and/or ADCs focused on the field of immuno-oncology. The company was formerly known as Fundamental Applied Biology, Inc. Sutro Biopharma, Inc. was incorporated in 2003 and is headquartered in South San Francisco, California.
STRO (Sutro Biopharma, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $336.5M, a beta of 1.64 versus the broader market, a 52-week range of 6.7-41.88, average daily share volume of 212K, a public-listing history dating back to 2018, approximately 269 full-time employees. These structural characteristics shape how STRO stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.64 indicates STRO has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position.
What is a covered call on STRO?
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 STRO snapshot
As of May 15, 2026, spot at $39.78, ATM IV 111.00%, IV rank 16.52%, expected move 31.82%. The covered call on STRO 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 STRO specifically: STRO IV at 111.00% is on the cheap side of its 1-year range, which means a premium-selling STRO covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 31.82% (roughly $12.66 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 STRO expiries trade a higher absolute premium for lower per-day decay. Position sizing on STRO should anchor to the underlying notional of $39.78 per share and to the trader's directional view on STRO stock.
STRO covered call setup
The STRO 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 STRO near $39.78, the first option leg uses a $41.77 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed STRO 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 STRO shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $39.78 | long |
| Sell 1 | Call | $41.77 | N/A |
STRO 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.
STRO covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on STRO. 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 STRO
Covered calls on STRO are an income strategy run on existing STRO stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
STRO thesis for this covered call
The market-implied 1-standard-deviation range for STRO extends from approximately $27.12 on the downside to $52.44 on the upside. A STRO covered call collects premium on an existing long STRO position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether STRO will breach that level within the expiration window. Current STRO IV rank near 16.52% 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 STRO at 111.00%. As a Healthcare name, STRO options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to STRO-specific events.
STRO 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. STRO positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move STRO alongside the broader basket even when STRO-specific fundamentals are unchanged. Short-premium structures like a covered call on STRO carry tail risk when realized volatility exceeds the implied move; review historical STRO earnings reactions and macro stress periods before sizing. Always rebuild the position from current STRO chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on STRO?
- A covered call on STRO is the covered call strategy applied to STRO (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 STRO stock trading near $39.78, the strikes shown on this page are snapped to the nearest listed STRO chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are STRO 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 STRO covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 111.00%), 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 STRO covered call?
- The breakeven for the STRO 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 STRO market-implied 1-standard-deviation expected move is approximately 31.82%; 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 STRO?
- Covered calls on STRO are an income strategy run on existing STRO 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 STRO implied volatility affect this covered call?
- STRO ATM IV is at 111.00% with IV rank near 16.52%, 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.