ZS Covered Call Strategy
ZS (Zscaler, Inc.), in the Technology sector, (Software - Infrastructure industry), listed on NASDAQ.
Zscaler, Inc. operates as a cloud security company worldwide. The company provides Zscaler Internet Access solution that provides users, servers, operational technology, Internet of Things device secure access to externally managed applications, including software-as-a-service (SaaS) applications and Internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also offers Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy to understand digital experience score for each user, application, and location within an enterprise. In addition, the company provides workload segmentation solutions comprising Zscaler Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and platform as a service to reduce risk and ensure compliance with industry and organizational benchmarks; and Zscaler Cloud Workload Segmentation, which is designed to secure application-to-application communications inside public clouds and data centers to stop lateral threat movement, as well as prevents application compromise and reduces the risk of data breaches. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. It serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries.
ZS (Zscaler, Inc.) trades in the Technology sector, specifically Software - Infrastructure, with a market capitalization of approximately $24.51B, a beta of 0.96 versus the broader market, a 52-week range of 114.625-336.99, average daily share volume of 3.0M, a public-listing history dating back to 2018, approximately 7K full-time employees. These structural characteristics shape how ZS stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.96 places ZS roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.
What is a covered call on ZS?
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 ZS snapshot
As of May 15, 2026, spot at $161.02, ATM IV 83.91%, IV rank 100.00%, expected move 24.06%. The covered call on ZS 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 ZS specifically: ZS IV at 83.91% is rich versus its 1-year range, which favors premium-selling structures like a ZS covered call, with a market-implied 1-standard-deviation move of approximately 24.06% (roughly $38.74 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 ZS expiries trade a higher absolute premium for lower per-day decay. Position sizing on ZS should anchor to the underlying notional of $161.02 per share and to the trader's directional view on ZS stock.
ZS covered call setup
The ZS 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 ZS near $161.02, the first option leg uses a $170.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ZS 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 ZS shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 100 shares | Stock | $161.02 | long |
| Sell 1 | Call | $170.00 | $11.70 |
ZS covered call risk and reward
- Net Premium / Debit
- -$14,932.00
- Max Profit (per contract)
- $2,068.00
- Max Loss (per contract)
- -$14,931.00
- Breakeven(s)
- $149.32
- Risk / Reward Ratio
- 0.139
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.
ZS covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call on ZS. 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% | -$14,931.00 |
| $35.61 | -77.9% | -$11,370.87 |
| $71.21 | -55.8% | -$7,810.74 |
| $106.81 | -33.7% | -$4,250.61 |
| $142.42 | -11.6% | -$690.48 |
| $178.02 | +10.6% | +$2,068.00 |
| $213.62 | +32.7% | +$2,068.00 |
| $249.22 | +54.8% | +$2,068.00 |
| $284.82 | +76.9% | +$2,068.00 |
| $320.42 | +99.0% | +$2,068.00 |
When traders use covered call on ZS
Covered calls on ZS are an income strategy run on existing ZS stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
ZS thesis for this covered call
The market-implied 1-standard-deviation range for ZS extends from approximately $122.28 on the downside to $199.76 on the upside. A ZS covered call collects premium on an existing long ZS position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether ZS will breach that level within the expiration window. Current ZS IV rank near 100.00% 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 ZS at 83.91%. As a Technology name, ZS options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ZS-specific events.
ZS 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. ZS positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ZS alongside the broader basket even when ZS-specific fundamentals are unchanged. Short-premium structures like a covered call on ZS carry tail risk when realized volatility exceeds the implied move; review historical ZS earnings reactions and macro stress periods before sizing. Always rebuild the position from current ZS chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on ZS?
- A covered call on ZS is the covered call strategy applied to ZS (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 ZS stock trading near $161.02, the strikes shown on this page are snapped to the nearest listed ZS chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ZS 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 ZS covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 83.91%), the computed maximum profit is $2,068.00 per contract and the computed maximum loss is -$14,931.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ZS covered call?
- The breakeven for the ZS covered call priced on this page is roughly $149.32 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 ZS market-implied 1-standard-deviation expected move is approximately 24.06%; 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 ZS?
- Covered calls on ZS are an income strategy run on existing ZS 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 ZS implied volatility affect this covered call?
- ZS ATM IV is at 83.91% with IV rank near 100.00%, 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.