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Why ADI Is an Excellent Covered Call Candidate Right Now Strong · 85/100
Analog Devices Inc (Technology) · $420.55 ·
Analysis generated Oct 7, 2026 ·
Data as of market close Oct 7
Quick Take
ADI is trading at $420.55 with RSI at 74 (overbought territory). Options IV is at 38% — 48% below its 30-day average of 74%. 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)
74
IV Today
38.0%
IV vs 30d Avg
-48%
MACD
bullish
ADX
29
MFI
76
The Setup
ADI Covered Call
LONG STOCK
100 shares @ $420.55
SHORT CALL
$455 Dec '26 · $17.26/sh
Net Cost
$40,329
Max Profit
+$5,171
Break-even
$403.29
Projected P&L at Target
+$5,171
(12.8%)
P&L at Expiry
P&L Scenarios
What happens at different ADI prices by expiry:
| ADI Price | Today | Oct 31 | Nov 24 | Dec 18 (exp) |
|---|---|---|---|---|
| $336 (-20%) | -$6,810 | -$6,721 | -$6,687 | -$6,685 |
| $357 (-15%) | -$4,871 | -$4,695 | -$4,593 | -$4,582 |
| $379 (-10%) | -$3,060 | -$2,768 | -$2,536 | -$2,479 |
| $400 (-5%) | -$1,426 | -$1,005 | -$583 | -$377 |
| $412 (-2%) | -$543 | -$50 | +$497 | +$885 |
| $421 (0%) ← now | +$0 | +$536 | +$1,161 | +$1,726 |
| $429 (+2%) | +$507 | +$1,079 | +$1,774 | +$2,567 |
| $442 (+5%) | +$1,197 | +$1,811 | +$2,584 | +$3,829 |
| $455 (+8%) ← target | +$1,840 | +$2,478 | +$3,292 | +$5,171 |
| $463 (+10%) | +$2,165 | +$2,807 | +$3,623 | +$5,171 |
| $484 (+15%) | +$2,919 | +$3,541 | +$4,297 | +$5,171 |
| $505 (+20%) | +$3,487 | +$4,055 | +$4,686 | +$5,171 |
Why This Strategy, Why Now
- RSI at 74 — extended, ideal for selling calls
- IV -48% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 29 — moderate trend
- No squeeze — no imminent breakout
- MFI at 76 — money flow confirms overbought
Key Risks
ADI 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 ADI 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.