WMS Covered Call Strategy
WMS (Advanced Drainage Systems, Inc.), in the Industrials sector, (Construction industry), listed on NYSE.
Advanced Drainage Systems, Inc. designs, manufactures, and markets thermoplastic corrugated pipes and related water management products, and drainage solutions for use in the underground construction and infrastructure marketplace in the United States, Canada, Mexico, and internationally. The company operates through Pipe, International, Infiltrator, and Allied Products & Other segments. It offers single, double, and triple wall corrugated polypropylene and polyethylene pipes; plastic leachfield chambers and systems, EZflow synthetic aggregate bundles, mechanical aeration wastewater solutions, septic tanks and accessories, and combined treatment and dispersal systems; and allied products, including storm retention/detention and septic chambers, polyvinyl chloride drainage structures, fittings, and water quality filters and separators. The company also purchases and distributes construction fabrics and other geosynthetic products for soil stabilization, reinforcement, filtration, separation, erosion control, and sub-surface drainage, as well as drainage grates and other products. It offers its products for non-residential, residential, agriculture, and infrastructure applications through a network of approximately 38 distribution centers. The company was incorporated in 1966 and is headquartered in Hilliard, Ohio.
WMS (Advanced Drainage Systems, Inc.) trades in the Industrials sector, specifically Construction, with a market capitalization of approximately $10.74B, a trailing P/E of 22.78, a beta of 1.33 versus the broader market, a 52-week range of 104.69-179.315, average daily share volume of 867K, a public-listing history dating back to 2014, approximately 6K full-time employees. These structural characteristics shape how WMS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.33 indicates WMS has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. WMS pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a covered call on WMS?
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 WMS snapshot
As of May 15, 2026, spot at $135.95, ATM IV 51.50%, IV rank 47.31%, expected move 14.76%. The covered call on WMS 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 WMS specifically: WMS IV at 51.50% is mid-range versus its 1-year history, so the credit collected on a WMS covered call sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 14.76% (roughly $20.07 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 WMS expiries trade a higher absolute premium for lower per-day decay. Position sizing on WMS should anchor to the underlying notional of $135.95 per share and to the trader's directional view on WMS stock.
WMS covered call setup
The WMS 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 WMS near $135.95, the first option leg uses a $145.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed WMS 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 WMS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $135.95 | long |
| Sell 1 | Call | $145.00 | $5.70 |
WMS covered call risk and reward
- Net Premium / Debit
- -$13,025.00
- Max Profit (per contract)
- $1,475.00
- Max Loss (per contract)
- -$13,024.00
- Breakeven(s)
- $130.25
- Risk / Reward Ratio
- 0.113
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.
WMS covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on WMS. 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% | -$13,024.00 |
| $30.07 | -77.9% | -$10,018.18 |
| $60.13 | -55.8% | -$7,012.36 |
| $90.18 | -33.7% | -$4,006.54 |
| $120.24 | -11.6% | -$1,000.72 |
| $150.30 | +10.6% | +$1,475.00 |
| $180.36 | +32.7% | +$1,475.00 |
| $210.42 | +54.8% | +$1,475.00 |
| $240.48 | +76.9% | +$1,475.00 |
| $270.53 | +99.0% | +$1,475.00 |
When traders use covered call on WMS
Covered calls on WMS are an income strategy run on existing WMS stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
WMS thesis for this covered call
The market-implied 1-standard-deviation range for WMS extends from approximately $115.88 on the downside to $156.02 on the upside. A WMS covered call collects premium on an existing long WMS position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether WMS will breach that level within the expiration window. Current WMS IV rank near 47.31% is mid-range against its 1-year distribution, so the IV signal is neutral; the covered call thesis on WMS should anchor more to the directional view and the expected-move geometry. As a Industrials name, WMS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to WMS-specific events.
WMS 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. WMS positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move WMS alongside the broader basket even when WMS-specific fundamentals are unchanged. Short-premium structures like a covered call on WMS carry tail risk when realized volatility exceeds the implied move; review historical WMS earnings reactions and macro stress periods before sizing. Always rebuild the position from current WMS chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on WMS?
- A covered call on WMS is the covered call strategy applied to WMS (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 WMS stock trading near $135.95, the strikes shown on this page are snapped to the nearest listed WMS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are WMS 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 WMS covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 51.50%), the computed maximum profit is $1,475.00 per contract and the computed maximum loss is -$13,024.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a WMS covered call?
- The breakeven for the WMS covered call priced on this page is roughly $130.25 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 WMS market-implied 1-standard-deviation expected move is approximately 14.76%; 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 WMS?
- Covered calls on WMS are an income strategy run on existing WMS 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 WMS implied volatility affect this covered call?
- WMS ATM IV is at 51.50% with IV rank near 47.31%, 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.