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Why CDNS Is an Excellent Covered Call Candidate Right Now Strong · 85/100
Cadence Design Systems Inc (Technology) · $359.55 ·
Analysis generated Oct 7, 2026 ·
Data as of market close Oct 7
Quick Take
CDNS is trading at $359.55 with RSI at 74 (overbought territory). Options IV is at 43% — 46% below its 30-day average of 78%. 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
42.6%
IV vs 30d Avg
-46%
MACD
bullish
ADX
29
MFI
87
The Setup
CDNS Covered Call
LONG STOCK
100 shares @ $359.55
SHORT CALL
$390 Dec '26 · $17.29/sh
Net Cost
$34,226
Max Profit
+$4,774
Break-even
$342.26
Projected P&L at Target
+$4,774
(13.9%)
P&L at Expiry
P&L Scenarios
What happens at different CDNS prices by expiry:
| CDNS Price | Today | Oct 31 | Nov 24 | Dec 18 (exp) |
|---|---|---|---|---|
| $288 (-20%) | -$5,672 | -$5,537 | -$5,468 | -$5,462 |
| $306 (-15%) | -$4,077 | -$3,850 | -$3,692 | -$3,664 |
| $324 (-10%) | -$2,600 | -$2,264 | -$1,966 | -$1,866 |
| $342 (-5%) | -$1,268 | -$823 | -$350 | -$69 |
| $352 (-2%) | -$547 | -$42 | +$537 | +$1,010 |
| $360 (0%) ← now | -$100 | +$439 | +$1,082 | +$1,729 |
| $367 (+2%) | +$319 | +$888 | +$1,587 | +$2,448 |
| $378 (+5%) | +$897 | +$1,499 | +$2,262 | +$3,527 |
| $390 (+8%) ← target | +$1,488 | +$2,113 | +$2,913 | +$4,774 |
| $396 (+10%) | +$1,725 | +$2,353 | +$3,157 | +$4,774 |
| $413 (+15%) | +$2,394 | +$3,013 | +$3,779 | +$4,774 |
| $431 (+20%) | +$2,923 | +$3,504 | +$4,178 | +$4,774 |
Why This Strategy, Why Now
- RSI at 74 — extended, ideal for selling calls
- IV -46% 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 87 — money flow confirms overbought
Key Risks
CDNS 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 CDNS 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.