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Covered Calls on a $3 Stock: A BYND Editorial That Puts the Numbers First
Numbers-first guide to covered calls on BYND at $3, clean stat cards, breakeven math, max profit, and practical rules for 30 to 45 DTE cycles.
Andrew Crowder
October 23, 2025
Covered Calls on a $3 Stock: A BYND Editorial That Puts the Numbers First
Mechanics mixed with skepticism.
When a stock trades near $3, the market whispers in percentages. Premiums look large, spreads look small, and it’s tempting to annualize everything into oblivion. Covered calls are how you turn that noise into a repeatable process, if you let the math, not the hope, make the decisions.
Below is a clean, peer-review style walkthrough using the option chain from your screenshot (November 21, 2025 expiration, 29 DTE). I’ll show the exact stats most readers need to run this at home without theatrics.
Chain Snapshot (from your image)
Expiration: November 21, 2025 (≈29 DTE)
Strike | Delta | Prob. OTM | Prob. Touch | Bid | Ask | Mid* |
|---|---|---|---|---|---|---|
5.0 | 0.52 | 85.18% | 45.15% | 0.76 | 0.80 | 0.78 |
5.5 | 0.51 | 87.08% | 39.49% | 0.73 | 0.78 | 0.755 |
6.0 | 0.48 | 88.60% | 34.66% | 0.68 | 0.75 | 0.715 |
6.5 | 0.46 | 89.86% | 30.45% | 0.60 | 0.73 | 0.665 |
7.0 | 0.44 | 90.88% | 27.47% | 0.62 | 0.68 | 0.65 |
7.5 | 0.42 | 91.79% | 24.51% | 0.56 | 0.66 | 0.61 |
8.0 | 0.41 | 92.51% | 22.45% | 0.53 | 0.67 | 0.60 |
*Mid = (Bid + Ask) ÷ 2. Vendor probability fields (“Prob. OTM/Touch”) are model estimates, not guarantees.
Method (what we’re testing)
Objective. Convert a volatile, low-priced equity (BYND ~ $3.00) into a structured income cycle using covered calls with ~30 DTE.
Mechanics. Long 100 shares + short 1 call.
Breakeven = stock entry – premium.
Max profit (if called) = (strike – entry) + premium.
Downside = equity risk minus the premium cushion.
Sizing = keep any single name ≤ 1 to4% of portfolio.
Strike selection. In most cases, start around 0.25 to 0.35 delta or just beyond the expected move; then adjust for liquidity and desired call-away odds. The options chain above shows deltas ~0.41–0.52 in the 5 to 8 strikes.
Case A - Sell the $6.00 Call (Mid ≈ $0.715)
Basis after premium: $2.285
Breakeven (expiry): $2.285
Max profit if called: $3.715
Max return on basis: ~162.6%
Income yield this cycle (on basis): ~31.3%
Chain guides: Prob. OTM 88.6%, Prob. Touch 34.7%, Δ ≈ 0.48
What-if at expiration (per 100 shares):
Stock @ Exp | P/L ($) | Return on Basis |
|---|---|---|
2.00 | −0.285 | −12.5% |
2.50 | +0.215 | +9.4% |
3.00 | +0.715 | +31.3% |
3.50 | +1.215 | +53.2% |
5.00 | +2.715 | +118.8% |
6.00+ (called) | +3.715 | +162.6% |
Interpretation. Large percentage optics, real equity exposure. The cushion is material; it is not a parachute.
Case B - Sell the $7.00 Call (Mid ≈ $0.65)
Basis after premium: $2.35
Breakeven: $2.35
Max profit if called: $4.65
Max return on basis: ~197.9%
Income yield this cycle (on basis): ~27.7%
Chain guides: Prob. OTM 90.9%, Prob. Touch 27.5%, Δ ≈ 0.44
What-if at expiration:
Stock @ Exp | P/L ($) | Return on Basis |
|---|---|---|
2.00 | −0.350 | −14.9% |
2.50 | +0.150 | +6.4% |
3.00 | +0.650 | +27.7% |
3.50 | +1.150 | +48.9% |
5.00 | +2.650 | +112.8% |
6.00 | +3.650 | +155.3% |
7.00+ (called) | +4.650 | +197.9% |
Interpretation. Smaller income cushion than the $6; much better upside if BYND rebounds. Lower “touch” probability implies fewer call-away scenarios if you trust the model.
Results (what the numbers actually say)
Premium is powerful, but honest. Both strikes generate double-digit returns on basis for the cycle if the stock is flat. That’s the attraction.
Your worst month still hurts. If BYND trades down to $2 by expiration, the income helps but does not immunize you.
Strike selection changes the character of the trade. The $6 is an income engine with a tighter leash; the $7 is an upside-friendly compromise.
Liquidity is edge. On a $0.65 to $0.72 credit, “donating” $0.05 to the spread is 7 to 8% of premium. Use limit orders. If you can’t get paid fairly, trade something else.
Discussion (how to run this like an adult)
Duration: 30 to 45 DTE balances theta decay with manageable gamma risk near expiration.
Events: Earnings in your window? You’re choosing gap risk. Either move beyond earnings or accept the bet on purpose.
Roll rules (decide before entry):
If short-call delta > 0.55 with ≥10 DTE, roll up/out to maintain long delta and add credit.
If delta < 0.10 with ≤7 DTE, often let it expire, then reset next cycle.
Sizing: Keep BYND, or any story stock, ≤ 1–3% of portfolio. You’re managing sequence risk, not chasing a single home run.
Assignment mindset: Being called away is a feature, not a failure. If you want to stay long, roll before assignment; if you’re happy to exit, take the win cleanly.
Conclusion
Covered calls don’t make a company better; they make your process better. With BYND, IV is elevated because the distribution of outcomes is unusually wide, squeeze dynamics, dilution, and an earnings countdown. That’s precisely when the discipline matters most: let the rules pick the strikes and the exits. Month by month, that’s how you turn noisy volatility into a sober paycheck. As always, understand the risks and position-size accordingly.
Probabilities over predictions,
Andy Crowder
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