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ADP Covered Call Analysis: Proceed With Caution Weak · 35/100
Automatic Data Processing Inc (Technology) · $188.79 ·
Analysis generated Apr 13, 2026 ·
Data as of market close Apr 13
This strategy is NOT recommended for ADP right now
Score 35/100. The technical signals do not support selling covered calls on ADP at this time.
RSI at 33 — oversold, not ideal for selling calls. IV -48% vs avg — premiums below average, less income. TTM Squeeze ON — breakout imminent, risky for capped strategies.
Check back when conditions improve, or consider a different strategy.
Quick Take
ADP is trading at $188.79 with RSI at 33 (oversold territory). Options IV is at 29% — 48% below its 30-day average of 57%. Neither RSI nor IV strongly favor selling calls right now. Consider waiting for better conditions or using a different strategy.
Technical Signals
RSI (14)
33
IV Today
29.4%
IV vs 30d Avg
-48%
MACD
bullish
ADX
29
MFI
24
The Setup
ADP Covered Call
LONG STOCK
100 shares @ $188.79
SHORT CALL
$205 Jun '26 · $5.31/sh
Net Cost
$18,348
Max Profit
+$2,152
Break-even
$183.48
Projected P&L at Target
+$2,152
(11.7%)
P&L at Expiry
P&L Scenarios
What happens at different ADP prices by expiry:
| ADP Price | Today | May 5 | May 27 | Jun 19 (exp) |
|---|---|---|---|---|
| $151 (-20%) | -$3,261 | -$3,248 | -$3,245 | -$3,245 |
| $160 (-15%) | -$2,352 | -$2,316 | -$2,302 | -$2,301 |
| $170 (-10%) | -$1,486 | -$1,411 | -$1,364 | -$1,357 |
| $179 (-5%) | -$693 | -$565 | -$452 | -$413 |
| $185 (-2%) | -$264 | -$102 | +$62 | +$153 |
| $189 (0%) ← now | +$0 | +$183 | +$383 | +$531 |
| $193 (+2%) | +$246 | +$446 | +$681 | +$909 |
| $198 (+5%) | +$575 | +$797 | +$1,072 | +$1,475 |
| $205 (+9%) ← target | +$911 | +$1,146 | +$1,444 | +$2,152 |
| $208 (+10%) | +$1,026 | +$1,262 | +$1,561 | +$2,152 |
| $217 (+15%) | +$1,359 | +$1,585 | +$1,854 | +$2,152 |
| $227 (+20%) | +$1,593 | +$1,791 | +$2,001 | +$2,152 |
Why This Strategy, Why Now
- RSI at 33 — oversold, not ideal for selling calls
- IV -48% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 29 — moderate trend
- TTM Squeeze ON — breakout imminent, risky for capped strategies
Key Risks
ADP has bullish momentum (MACD). If a positive catalyst emerges (earnings beat, product launch), the stock could gap past your strike. Consider rolling the call up if ADP approaches the strike before expiry.
ADX at 29 indicates a moderately strong trend. In trending markets, covered calls cap your upside too early. Use a higher strike to leave more room.
TTM Squeeze is ON — a volatility breakout may be imminent. If the breakout is to the upside, your short call will be tested quickly.