THG Covered Call Strategy
THG (The Hanover Insurance Group, Inc.), in the Financial Services sector, (Insurance - Property & Casualty industry), listed on NYSE.
The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States. The company operates through three segments: Commercial Lines, Personal Lines, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, and workers' compensation insurance products, as well as management and professional liability, marine, specialty industrial and commercial property, monoline general liability, surety, umbrella, fidelity, crime, and other commercial coverages. The Personal Lines segment provides personal automobile and homeowner's coverages, as well as other personal coverages, such as personal umbrella, inland marine, fire, personal watercraft, personal cyber, and other miscellaneous coverages. The Other segment markets investment management services to institutions, pension funds, and other organizations. The Hanover Insurance Group, Inc. markets its products and services through independent agents and brokers.
THG (The Hanover Insurance Group, Inc.) trades in the Financial Services sector, specifically Insurance - Property & Casualty, with a market capitalization of approximately $6.62B, a trailing P/E of 9.32, a beta of 0.32 versus the broader market, a 52-week range of 160.7-191.66, average daily share volume of 288K, a public-listing history dating back to 1995, approximately 5K full-time employees. These structural characteristics shape how THG stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.32 indicates THG 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 9.32 is on the value side, where IV often compresses outside event windows because forward growth expectations are already discounted into the share price. THG pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on THG?
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 THG snapshot
As of May 15, 2026, spot at $194.88, ATM IV 17.90%, IV rank 1.07%, expected move 5.13%. The covered call on THG 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 98-day expiry.
Why this covered call structure on THG specifically: THG IV at 17.90% is on the cheap side of its 1-year range, which means a premium-selling THG covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 5.13% (roughly $10.00 on the underlying). The 98-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated THG expiries trade a higher absolute premium for lower per-day decay. Position sizing on THG should anchor to the underlying notional of $194.88 per share and to the trader's directional view on THG stock.
THG covered call setup
The THG 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 THG near $194.88, the first option leg uses a $200.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed THG chain at a 98-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 THG shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $194.88 | long |
| Sell 1 | Call | $200.00 | $5.95 |
THG covered call risk and reward
- Net Premium / Debit
- -$18,893.00
- Max Profit (per contract)
- $1,107.00
- Max Loss (per contract)
- -$18,892.00
- Breakeven(s)
- $188.93
- Risk / Reward Ratio
- 0.059
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.
THG covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on THG. 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% | -$18,892.00 |
| $43.10 | -77.9% | -$14,583.21 |
| $86.19 | -55.8% | -$10,274.41 |
| $129.27 | -33.7% | -$5,965.62 |
| $172.36 | -11.6% | -$1,656.82 |
| $215.45 | +10.6% | +$1,107.00 |
| $258.54 | +32.7% | +$1,107.00 |
| $301.63 | +54.8% | +$1,107.00 |
| $344.71 | +76.9% | +$1,107.00 |
| $387.80 | +99.0% | +$1,107.00 |
When traders use covered call on THG
Covered calls on THG are an income strategy run on existing THG stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
THG thesis for this covered call
The market-implied 1-standard-deviation range for THG extends from approximately $184.88 on the downside to $204.88 on the upside. A THG covered call collects premium on an existing long THG position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether THG will breach that level within the expiration window. Current THG IV rank near 1.07% 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 THG at 17.90%. As a Financial Services name, THG options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to THG-specific events.
THG 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. THG positions also carry Financial Services sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move THG alongside the broader basket even when THG-specific fundamentals are unchanged. Short-premium structures like a covered call on THG carry tail risk when realized volatility exceeds the implied move; review historical THG earnings reactions and macro stress periods before sizing. Always rebuild the position from current THG chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on THG?
- A covered call on THG is the covered call strategy applied to THG (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 THG stock trading near $194.88, the strikes shown on this page are snapped to the nearest listed THG chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are THG 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 THG covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 17.90%), the computed maximum profit is $1,107.00 per contract and the computed maximum loss is -$18,892.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a THG covered call?
- The breakeven for the THG covered call priced on this page is roughly $188.93 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 THG market-implied 1-standard-deviation expected move is approximately 5.13%; 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 THG?
- Covered calls on THG are an income strategy run on existing THG 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 THG implied volatility affect this covered call?
- THG ATM IV is at 17.90% with IV rank near 1.07%, 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.