VAL Covered Call: Strike Selection, Premium & Risk
How to sell covered calls on Valaris Limited — optimal strikes, expected premium, and the risks that actually matter for a small-cap energy name.
Is VAL a good covered call candidate?
VAL (Valaris Limited) is a small-cap energy name with a low share price and fair options liquidity. Implied volatility is high enough to pay meaningful premium without being wild, which is why this ticker shows up frequently in wheel-strategy watchlists. It pays no dividend, so every dollar of income must come from the options you sell.
Strike selection for a VAL covered call
For VAL covered calls, target strikes 8-12% out of the money at deltas around 0.15-0.25. Use 21-35 DTE to capture IV without excess gamma risk. On a high-volatility name like VAL, going closer to the money chases premium at the cost of a much higher assignment probability — the risk of being called away becomes meaningful below 8-12% OTM.
Expected premium and income on VAL
Typical monthly premium collected on VAL runs around 2.0-3.5% of capital, which annualizes to roughly 24-42% if you sell new contracts every cycle. Capital required to run a single contract wheel on VAL is under $5,000 — the share price and the 100-share lot size set the minimum, not the strategy.
Risk management for VAL covered call trades
The core risk on a covered call is opportunity cost: if the stock rips through your strike, your upside is capped. You still profit, just less than someone who held the shares outright. VAL's high-volatility profile means 3-6% daily moves are normal during earnings or macro catalysts. Energy names track crude and natural gas prices closely — OPEC headlines and inventory prints drive intraday moves far more than company fundamentals most weeks.
VAL Covered Call FAQ
What is the best strike price for a VAL covered call?
On VAL, target 8-12% out of the money at 0.15-0.25 delta. On a high-volatility stock like this, closer-to-the-money strikes chase premium but spike assignment probability to uncomfortable levels.
How much premium can I collect selling calls on VAL?
Typical monthly premium on VAL is 2.0-3.5% of position value, annualizing to 24-42% when you roll every cycle. Earnings months can pay 2-3x the normal rate because of elevated IV.
What expiration should I use for VAL covered call trades?
Use 21-35 DTE to capture IV without excess gamma risk as a default for VAL. This window captures the steepest part of the theta curve without excess gamma risk.
Is VAL suitable for beginners selling options?
Not ideal for beginners. Smaller-cap names can have wider spreads and sharper moves. Start with large caps or major ETFs first. Always check the bid/ask spread before entering — anything wider than 5% of the mid price is a warning sign.
Related VAL strategies
Price a VAL covered call right now
Use the free OptionsPilot calculator with live quotes to find the best covered call strike on VAL.
Open the Strike Finder →