How are TXN 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 TXN covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 43.34%), the computed maximum profit is $2,508.00 per contract and the computed maximum loss is -$29,491.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a TXN covered call?

The breakeven for the TXN covered call priced on this page is roughly $294.92 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 TXN market-implied 1-standard-deviation expected move is approximately 12.42%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current TXN implied volatility affect this covered call?

TXN ATM IV is at 43.34% with IV rank near 71.45%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.

TXN Covered Call Strategy

TXN (Texas Instruments Incorporated), in the Technology sector, (Semiconductors industry), listed on NASDAQ.

Texas Instruments Incorporated designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog and Embedded Processing. The Analog segment offers power products to manage power requirements in various levels using battery-management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage supervisors, voltage references, and lighting products. This segment also provides signal chain products that sense, condition, and measure signals to allow information to be transferred or converted for further processing and control for use in end markets, including amplifiers, data converters, interface products, motor drives, clocks, and sensing products. The Embedded Processing segment offers microcontrollers that are used in electronic equipment; digital signal processors for mathematical computations; and applications processors for specific computing activity. This segment offers products for use in various markets, such as industrial, automotive, personal electronics, communications equipment, enterprise systems, and calculators and other.

TXN (Texas Instruments Incorporated) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $278.80B, a trailing P/E of 51.88, a beta of 1.30 versus the broader market, a 52-week range of 152.73-309.32, average daily share volume of 7.1M, a public-listing history dating back to 1972, approximately 34K full-time employees. These structural characteristics shape how TXN stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.30 places TXN roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 51.88 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. TXN pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a covered call on TXN?

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 TXN snapshot

As of May 15, 2026, spot at $303.52, ATM IV 43.34%, IV rank 71.45%, expected move 12.42%. The covered call on TXN 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 28-day expiry.

Why this covered call structure on TXN specifically: TXN IV at 43.34% is rich versus its 1-year range, which favors premium-selling structures like a TXN covered call, with a market-implied 1-standard-deviation move of approximately 12.42% (roughly $37.71 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 TXN expiries trade a higher absolute premium for lower per-day decay. Position sizing on TXN should anchor to the underlying notional of $303.52 per share and to the trader's directional view on TXN stock.

TXN covered call setup

The TXN 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 TXN near $303.52, the first option leg uses a $320.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed TXN 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 TXN shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$303.52	long
Sell 1	Call	$320.00	$8.60

TXN covered call risk and reward

Net Premium / Debit: -$29,492.00
Max Profit (per contract): $2,508.00
Max Loss (per contract): -$29,491.00
Breakeven(s): $294.92
Risk / Reward Ratio: 0.085

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.

TXN covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on TXN. 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%	-$29,491.00
$67.12	-77.9%	-$22,780.12
$134.23	-55.8%	-$16,069.23
$201.34	-33.7%	-$9,358.35
$268.45	-11.6%	-$2,647.46
$335.55	+10.6%	+$2,508.00
$402.66	+32.7%	+$2,508.00
$469.77	+54.8%	+$2,508.00
$536.88	+76.9%	+$2,508.00
$603.99	+99.0%	+$2,508.00

When traders use covered call on TXN

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

TXN thesis for this covered call

The market-implied 1-standard-deviation range for TXN extends from approximately $265.81 on the downside to $341.23 on the upside. A TXN covered call collects premium on an existing long TXN position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether TXN will breach that level within the expiration window. Current TXN IV rank near 71.45% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on TXN at 43.34%. As a Technology name, TXN options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to TXN-specific events.

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

Frequently asked questions

What is a covered call on TXN?: A covered call on TXN is the covered call strategy applied to TXN (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 TXN stock trading near $303.52, the strikes shown on this page are snapped to the nearest listed TXN chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are TXN 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 TXN covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 43.34%), the computed maximum profit is $2,508.00 per contract and the computed maximum loss is -$29,491.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a TXN covered call?: The breakeven for the TXN covered call priced on this page is roughly $294.92 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 TXN market-implied 1-standard-deviation expected move is approximately 12.42%; 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 TXN?: Covered calls on TXN are an income strategy run on existing TXN 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 TXN implied volatility affect this covered call?: TXN ATM IV is at 43.34% with IV rank near 71.45%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.