VSTM Covered Call Strategy
VSTM (Verastem, Inc.), in the Healthcare sector, (Biotechnology industry), listed on NASDAQ.
Verastem, Inc., a development-stage biopharmaceutical company, focusing on developing and commercializing drugs for the treatment of cancer. Its product in development includes VS-6766, a dual rapidly accelerated fibrosarcoma (RAF)/mitogen-activated protein kinase (MEK) clamp that blocks MEK kinase activity and the ability of RAF to phosphorylate MEK. The company also engages in developing RAMP 201, an adaptive two-part multicenter, parallel cohort, randomized open label trial to evaluate the efficacy and safety of VS-6766 and in combination with defactinib, an oral small molecule inhibitor of focal adhesion kinase (FAK) in patients with recurrent low grade serous ovarian cancer; and RAMP 202, which is in Phase 2 trial to evaluate the safety of VS-6766 in combination with defactinib in patients with KRAS and BRAF mutant non-small cell lung cancer following treatment with a platinum-based regimen and immune checkpoint inhibitor. Verastem, Inc. has license agreements with Chugai Pharmaceutical Co., Ltd. for the development, commercialization, and manufacture of products containing VS-6766; and Pfizer Inc. to research, develop, manufacture, and commercialize products containing Pfizer's inhibitors of FAK for therapeutic, diagnostic and prophylactic uses in humans. In addition, it has clinical collaboration agreement with Amgen, Inc. to evaluate the combination of VS-6766 with Amgen's KRAS-G12C inhibitor LUMAKRASTM which in Phase 1/2 trial entitled RAMP 203. The company was incorporated in 2010 and is headquartered in Needham, Massachusetts.
VSTM (Verastem, Inc.) trades in the Healthcare sector, specifically Biotechnology, with a market capitalization of approximately $327.2M, a beta of 0.34 versus the broader market, a 52-week range of 4.01-11.25, average daily share volume of 2.1M, a public-listing history dating back to 2012, approximately 78 full-time employees. These structural characteristics shape how VSTM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.34 indicates VSTM has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure.
What is a covered call on VSTM?
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 VSTM snapshot
As of May 15, 2026, spot at $4.37, ATM IV 106.30%, IV rank 27.08%, expected move 30.48%. The covered call on VSTM 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 VSTM specifically: VSTM IV at 106.30% is on the cheap side of its 1-year range, which means a premium-selling VSTM covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 30.48% (roughly $1.33 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 VSTM expiries trade a higher absolute premium for lower per-day decay. Position sizing on VSTM should anchor to the underlying notional of $4.37 per share and to the trader's directional view on VSTM stock.
VSTM covered call setup
The VSTM 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 VSTM near $4.37, the first option leg uses a $4.59 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed VSTM 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 VSTM shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $4.37 | long |
| Sell 1 | Call | $4.59 | N/A |
VSTM 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.
VSTM covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on VSTM. 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 VSTM
Covered calls on VSTM are an income strategy run on existing VSTM stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
VSTM thesis for this covered call
The market-implied 1-standard-deviation range for VSTM extends from approximately $3.04 on the downside to $5.70 on the upside. A VSTM covered call collects premium on an existing long VSTM position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether VSTM will breach that level within the expiration window. Current VSTM IV rank near 27.08% 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 VSTM at 106.30%. As a Healthcare name, VSTM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to VSTM-specific events.
VSTM 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. VSTM positions also carry Healthcare sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move VSTM alongside the broader basket even when VSTM-specific fundamentals are unchanged. Short-premium structures like a covered call on VSTM carry tail risk when realized volatility exceeds the implied move; review historical VSTM earnings reactions and macro stress periods before sizing. Always rebuild the position from current VSTM chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on VSTM?
- A covered call on VSTM is the covered call strategy applied to VSTM (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 VSTM stock trading near $4.37, the strikes shown on this page are snapped to the nearest listed VSTM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are VSTM 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 VSTM covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 106.30%), 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 VSTM covered call?
- The breakeven for the VSTM 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 VSTM market-implied 1-standard-deviation expected move is approximately 30.48%; 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 VSTM?
- Covered calls on VSTM are an income strategy run on existing VSTM 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 VSTM implied volatility affect this covered call?
- VSTM ATM IV is at 106.30% with IV rank near 27.08%, 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.