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ADP Covered Call Strategy: Is Now a Good Time to Sell Calls? Moderate · 65/100
Automatic Data Processing Inc (Technology) · $266.46 ·
Analysis generated Jul 31, 2026 ·
Data as of market close Jul 31
Quick Take
ADP is trading at $266.46 with RSI at 65 (neutral territory). Options IV is at 27% — 60% below its 30-day average of 67%. Neither RSI nor IV strongly favor selling calls right now. Consider waiting for better conditions or using a different strategy.
Technical Signals
RSI (14)
65
IV Today
26.7%
IV vs 30d Avg
-60%
MACD
bullish
ADX
37
MFI
59
The Setup
ADP Covered Call
LONG STOCK
100 shares @ $266.46
SHORT CALL
$290 Sep '26 · $3.5/sh
Net Cost
$26,296
Max Profit
+$2,704
Break-even
$262.96
Projected P&L at Target
+$2,704
(10.3%)
P&L at Expiry
P&L Scenarios
What happens at different ADP prices by expiry:
| ADP Price | Today | Aug 17 | Sep 2 | Sep 18 (exp) |
|---|---|---|---|---|
| $213 (-20%) | -$4,983 | -$4,979 | -$4,979 | -$4,979 |
| $226 (-15%) | -$3,666 | -$3,651 | -$3,647 | -$3,647 |
| $240 (-10%) | -$2,384 | -$2,337 | -$2,316 | -$2,315 |
| $253 (-5%) | -$1,181 | -$1,073 | -$996 | -$982 |
| $261 (-2%) | -$521 | -$368 | -$230 | -$183 |
| $266 (0%) ← now | -$115 | +$70 | +$257 | +$350 |
| $272 (+2%) | +$261 | +$475 | +$713 | +$883 |
| $280 (+5%) | +$764 | +$1,012 | +$1,316 | +$1,682 |
| $290 (+9%) ← target | +$1,294 | +$1,564 | +$1,909 | +$2,704 |
| $293 (+10%) | +$1,430 | +$1,702 | +$2,047 | +$2,704 |
| $306 (+15%) | +$1,892 | +$2,142 | +$2,434 | +$2,704 |
| $320 (+20%) | +$2,185 | +$2,388 | +$2,588 | +$2,704 |
Why This Strategy, Why Now
- RSI at 65 — extended, ideal for selling calls
- IV -60% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 37 — strong trend, stock may run past strike
- No squeeze — no imminent breakout
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 37 indicates a moderately strong trend. In trending markets, covered calls cap your upside too early. Use a higher strike to leave more room.