BofA's top 10 covered call plays

BofA's equity derivatives team is recommending ten covered call options plays with expiration next month.

The covered call option strategy involves selling a call option and purchasing 100 shares of the underlying stock. This strategy capitalizes on the downward and sideways movements of an equity position. It reduces downside risk and limits upside potential. If the call option expires in the money, the covered call writer has the obligation to deliver its 100 shares to the call purchaser at the exercise price.

BofA says the "strategy is best suited for names the call seller has a neutral short-term view on, as a call sells the right to upside participation beyond the call strike for a fee."

"Of all listed call overwriting options in Russell 1000 (IWB) stocks, the following candidates offer at least 6% premium by 20-Nov-2026 expiry while allowing for a potential upside of 7% (Call-Away Return) and having a notional option volume of at least $5M."

Company (Ticker)	Price	Expiration	Strike	Call Mid	Div	Call & Dividend Premium	Call-Away Return
TransDigm (TDG)	1143.06	Nov 20	1150.0	43.05	90.00	11.6%	12.2%
Cava Group (CAVA)	57.45	Nov 20	58.0	5.25	-	9.1%	10.1%
Cloudflare (NET)	291.69	Nov 20	292.5	26.35	-	9.0%	9.3%
Axon Enterprise (AXON)	392.64	Nov 20	395.0	35.40	-	9.0%	9.6%
Datadog (DDOG)	256.43	Nov 20	257.5	23.10	-	9.0%	9.4%
Carvana (CVNA)	60.26	Nov 20	61.0	5.18	-	8.6%	9.8%
Adv Energy Industries (AEIS)	239.65	Nov 20	240.0	20.10	-	8.4%	8.5%
Charter Comms (CHTR)	110.03	Nov 20	111.0	9.00	-	8.2%	9.1%
Builders FirstSource (BLDR)	53.92	Nov 20	55.0	3.60	-	6.7%	8.7%
Somnigroup Intl (SGI)	63.94	Nov 20	65.0	3.85	0.17	6.3%	7.9%

Recommended For You

Register for free to keep reading.

Create a free account to get unlimited breaking news and alerts when your stocks move.