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Why STM Is an Excellent Covered Call Candidate Right Now Strong · 85/100
STM · $39.48 ·
Analysis generated Apr 10, 2026 ·
Data as of market close Apr 10
· Market closed — data may be from last trading day
Quick Take
STM is trading at $39.48 with RSI at 72 (overbought territory). Options IV is at 45% — 28% below its 30-day average of 63%. While the stock is extended, IV is below average which means premiums aren't as rich. The trade still works but yields less income than usual.
Technical Signals
RSI (14)
72
IV Today
45.4%
IV vs 30d Avg
-28%
MACD
bullish
ADX
17
MFI
58
The Setup
STM Covered Call
LONG STOCK
100 shares @ $39.48
SHORT CALL
$43 Jun '26 · $2.05/sh
Net Cost
$3,743
Max Profit
+$557
Break-even
$37.43
Projected P&L at Target
+$557
(14.9%)
P&L at Expiry
P&L Scenarios
What happens at different STM prices by expiry:
| STM Price | Today | May 5 | May 27 | Jun 19 (exp) |
|---|---|---|---|---|
| $32 (-20%) | -$610 | -$594 | -$586 | -$585 |
| $34 (-15%) | -$435 | -$409 | -$391 | -$387 |
| $36 (-10%) | -$274 | -$236 | -$202 | -$190 |
| $38 (-5%) | -$127 | -$78 | -$25 | +$8 |
| $39 (-2%) | -$48 | +$8 | +$71 | +$126 |
| $39 (0%) ← now | +$1 | +$61 | +$131 | +$205 |
| $40 (+2%) | +$48 | +$110 | +$187 | +$284 |
| $41 (+5%) | +$112 | +$178 | +$261 | +$402 |
| $43 (+9%) ← target | +$186 | +$255 | +$343 | +$557 |
| $43 (+10%) | +$204 | +$274 | +$362 | +$557 |
| $45 (+15%) | +$280 | +$349 | +$434 | +$557 |
| $47 (+20%) | +$340 | +$405 | +$482 | +$557 |
Why This Strategy, Why Now
- RSI at 72 — extended, ideal for selling calls
- IV -28% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 17 — range-bound, perfect for selling calls
- No squeeze — no imminent breakout
Key Risks
STM 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 STM approaches the strike before expiry.