How are YUM 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 YUM covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 20.50%), the computed maximum profit is $685.00 per contract and the computed maximum loss is -$15,814.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.

What is the breakeven for a YUM covered call?

The breakeven for the YUM covered call priced on this page is roughly $158.15 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 YUM market-implied 1-standard-deviation expected move is approximately 5.88%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.

How does current YUM implied volatility affect this covered call?

YUM ATM IV is at 20.50% with IV rank near 24.04%, 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.

YUM Covered Call Strategy

YUM (Yum! Brands, Inc.), in the Consumer Cyclical sector, (Restaurants industry), listed on NYSE.

YUM! Brands, Inc. (YUM) is a leading global quick-service restaurant enterprise that focuses on the creation, management, and franchising of its restaurant concepts internationally. Its business is organized into four main divisions: KFC, Taco Bell, Pizza Hut, and The Habit Burger Grill. The company operates establishments under these well-known brands, offering diverse food categories such as chicken, pizza, Mexican-style dishes, and made-to-order chargrilled burgers and sandwiches, among other food products. As of December 31, 2021, YUM! Brands boasted a significant worldwide presence, comprising 26,934 KFC outlets, 18,381 Pizza Hut locations, 7,791 Taco Bell restaurants, and 318 The Habit Burger Grill units, spread across roughly 157 countries and territories.

YUM (Yum! Brands, Inc.) trades in the Consumer Cyclical sector, specifically Restaurants, with a market capitalization of approximately $43.10B, a trailing P/E of 24.92, a beta of 0.57 versus the broader market, a 52-week range of 137.33-169.39, average daily share volume of 1.9M, a public-listing history dating back to 1997, approximately 49K full-time employees. These structural characteristics shape how YUM stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 0.57 indicates YUM has historically moved less than the broader market, dampening realized volatility and producing tighter expected-move bands per unit of dollar exposure. YUM pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.

What is a covered call on YUM?

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 YUM snapshot

As of June 30, 2026, spot at $159.00, ATM IV 20.50%, IV rank 24.04%, expected move 5.88%. The covered call on YUM 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 17-day expiry.

Why this covered call structure on YUM specifically: YUM IV at 20.50% is on the cheap side of its 1-year range, which means a premium-selling YUM covered call collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 5.88% (roughly $9.34 on the underlying). The 17-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated YUM expiries trade a higher absolute premium for lower per-day decay. Position sizing on YUM should anchor to the underlying notional of $159.00 per share and to the trader's directional view on YUM stock.

YUM covered call setup

The YUM 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 YUM near $159.00, the first option leg uses a $165.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed YUM chain at a 17-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 YUM shares for the stock leg in covered calls and collars).

Action	Type	Strike / Basis	Premium (est)
Buy 100 shares	Stock	$159.00	long
Sell 1	Call	$165.00	$0.85

YUM covered call risk and reward

Net Premium / Debit: -$15,815.00
Max Profit (per contract): $685.00
Max Loss (per contract): -$15,814.00
Breakeven(s): $158.15
Risk / Reward Ratio: 0.043

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.

YUM covered call payoff curve

Modeled P&L at expiration across a range of underlying prices for the covered call on YUM. 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.

P&L at expiration across the modeled underlying-price range. Green shading marks profitable regions, red shading marks loss regions. Dotted purple verticals mark breakevens; the solid dark vertical marks current spot.

Underlying Price	% From Spot	P&L at Expiration
$0.01	-100.0%	-$15,814.00
$35.16	-77.9%	-$12,298.53
$70.32	-55.8%	-$8,783.07
$105.47	-33.7%	-$5,267.60
$140.63	-11.6%	-$1,752.13
$175.78	+10.6%	+$685.00
$210.94	+32.7%	+$685.00
$246.09	+54.8%	+$685.00
$281.25	+76.9%	+$685.00
$316.40	+99.0%	+$685.00

When traders use covered call on YUM

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

YUM thesis for this covered call

The market-implied 1-standard-deviation range for YUM extends from approximately $149.66 on the downside to $168.34 on the upside. A YUM covered call collects premium on an existing long YUM position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether YUM will breach that level within the expiration window. Current YUM IV rank near 24.04% 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 YUM at 20.50%. As a Consumer Cyclical name, YUM options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to YUM-specific events.

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

Frequently asked questions

What is a covered call on YUM?: A covered call on YUM is the covered call strategy applied to YUM (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 YUM stock trading near $159.00, the strikes shown on this page are snapped to the nearest listed YUM chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are YUM 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 YUM covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 20.50%), the computed maximum profit is $685.00 per contract and the computed maximum loss is -$15,814.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a YUM covered call?: The breakeven for the YUM covered call priced on this page is roughly $158.15 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 YUM market-implied 1-standard-deviation expected move is approximately 5.88%; 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 YUM?: Covered calls on YUM are an income strategy run on existing YUM 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 YUM implied volatility affect this covered call?: YUM ATM IV is at 20.50% with IV rank near 24.04%, 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.