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Why ADP Is an Excellent Covered Call Candidate Right Now Strong · 80/100
Automatic Data Processing Inc (Technology) · $241.92 ·
Analysis generated Jul 10, 2026 ·
Data as of market close Jul 10
Quick Take
ADP is trading at $241.92 with RSI at 64 (neutral territory). Options IV is at 31% — 50% below its 30-day average of 62%. Neither RSI nor IV strongly favor selling calls right now. Consider waiting for better conditions or using a different strategy.
Technical Signals
RSI (14)
64
IV Today
31.3%
IV vs 30d Avg
-50%
MACD
bullish
ADX
23
MFI
62
The Setup
ADP Covered Call
LONG STOCK
100 shares @ $241.92
SHORT CALL
$260 Sep '26 · $5.4/sh
Net Cost
$23,652
Max Profit
+$2,348
Break-even
$236.52
Projected P&L at Target
+$2,348
(9.9%)
P&L at Expiry
P&L Scenarios
What happens at different ADP prices by expiry:
| ADP Price | Today | Aug 3 | Aug 26 | Sep 18 (exp) |
|---|---|---|---|---|
| $194 (-20%) | -$4,312 | -$4,300 | -$4,298 | -$4,298 |
| $206 (-15%) | -$3,138 | -$3,102 | -$3,089 | -$3,089 |
| $218 (-10%) | -$2,019 | -$1,935 | -$1,885 | -$1,879 |
| $230 (-5%) | -$996 | -$844 | -$712 | -$670 |
| $237 (-2%) | -$446 | -$250 | -$50 | +$56 |
| $242 (0%) ← now | -$111 | +$112 | +$359 | +$540 |
| $247 (+2%) | +$196 | +$443 | +$734 | +$1,024 |
| $254 (+5%) | +$605 | +$877 | +$1,216 | +$1,750 |
| $260 (+7%) ← target | +$895 | +$1,177 | +$1,534 | +$2,348 |
| $266 (+10%) | +$1,147 | +$1,430 | +$1,784 | +$2,348 |
| $278 (+15%) | +$1,529 | +$1,789 | +$2,087 | +$2,348 |
| $290 (+20%) | +$1,781 | +$1,999 | +$2,215 | +$2,348 |
Why This Strategy, Why Now
- RSI at 64 — extended, ideal for selling calls
- IV -50% vs avg — premiums below average, less income
- MACD bullish — stock has upward momentum
- ADX at 23 — moderate trend
- 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.