TSEM Covered Call Strategy
TSEM (Tower Semiconductor Ltd.), in the Technology sector, (Semiconductors industry), listed on NASDAQ.
Tower Semiconductor Ltd. operates as a prominent independent semiconductor foundry, engaged in the worldwide production and sale of analog-intensive, mixed-signal semiconductor components. The company provides a comprehensive suite of customizable process technologies, including SiGe, BiCMOS, mixed signal/CMOS, RF CMOS, CMOS image sensors, integrated power management solutions, and MEMS. Furthermore, it offers wafer fabrication services, a design enablement platform to streamline the development process, and specialized services for process transfer optimization and new product development. Tower Semiconductor caters to both integrated device manufacturers and fabless companies, with its products serving a wide range of industries such as consumer electronics, computing, telecommunications, automotive, industrial, aerospace, defense, and medical devices. Established in 1993 and based in Migdal Haemek, Israel, its market reach extends across the United States, Japan, other Asian regions, and Europe.
TSEM (Tower Semiconductor Ltd.) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $29.37B, a trailing P/E of 103.55, a beta of 0.90 versus the broader market, a 52-week range of 46-319.94, average daily share volume of 2.3M, a public-listing history dating back to 1994, approximately 6K full-time employees. These structural characteristics shape how TSEM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.90 places TSEM roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 103.55 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. TSEM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on TSEM?
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.
TSEM snapshot
As of August 14, 2026, spot at $264.45, ATM IV 80.23%, IV rank 54.23%, expected move 23.00%. The covered call on TSEM 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 TSEM specifically: TSEM IV at 80.23% is mid-range versus its 1-year history, so the credit collected on a TSEM covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 23.00% (roughly $60.83 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 TSEM expiries trade a higher absolute premium for lower per-day decay. Position sizing on TSEM should anchor to the underlying notional of $264.45 per share and to the trader's directional view on TSEM stock.
TSEM covered call setup
The TSEM 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 TSEM at $264.45 on that close, the first option leg uses a $280.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TSEM 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 TSEM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $264.45 | long |
| Sell 1 | Call | $280.00 | $16.70 |
TSEM covered call risk and reward
- Net Premium / Debit
- -$24,775.00
- Max Profit (per contract)
- $3,225.00
- Max Loss (per contract)
- -$24,774.00
- Breakeven(s)
- $247.75
- Risk / Reward Ratio
- 0.130
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.
TSEM covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on TSEM. 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% | -$24,774.00 |
| $58.48 | -77.9% | -$18,926.97 |
| $116.95 | -55.8% | -$13,079.95 |
| $175.42 | -33.7% | -$7,232.92 |
| $233.89 | -11.6% | -$1,385.90 |
| $292.36 | +10.6% | +$3,225.00 |
| $350.83 | +32.7% | +$3,225.00 |
| $409.30 | +54.8% | +$3,225.00 |
| $467.77 | +76.9% | +$3,225.00 |
| $526.24 | +99.0% | +$3,225.00 |
When traders use covered call on TSEM
Covered calls on TSEM are an income strategy run on existing TSEM stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
TSEM thesis for this covered call
The market-implied 1-standard-deviation range for TSEM extends from approximately $203.62 on the downside to $325.28 on the upside. A TSEM covered call collects premium on an existing long TSEM position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether TSEM will breach that level within the expiration window. Current TSEM IV rank near 54.23% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on TSEM should anchor more to the directional view and the expected-move geometry. As a Technology name, TSEM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TSEM-specific events.
TSEM 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. TSEM positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move TSEM alongside the broader basket even when TSEM-specific fundamentals are unchanged. Short-premium structures like a covered call on TSEM carry tail risk when realized volatility exceeds the implied move; review historical TSEM earnings reactions and macro stress periods before sizing. Always rebuild the position from current TSEM chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on TSEM?
- A covered call on TSEM is the covered call strategy applied to TSEM (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 TSEM stock at $264.45 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed TSEM chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are TSEM 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 TSEM covered call priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 80.23%), the computed maximum profit is $3,225.00 per contract and the computed maximum loss is -$24,774.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a TSEM covered call?
- The breakeven for the TSEM covered call priced on this page is roughly $247.75 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 TSEM market-implied 1-standard-deviation expected move in the same options snapshot is approximately 23.00%; 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 TSEM?
- Covered calls on TSEM are an income strategy run on existing TSEM 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 TSEM implied volatility affect this covered call?
- TSEM ATM IV is at 80.23% with IV rank near 54.23%, 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.