Covered CallBMW.DE · DAXRisk: Low

Covered Call on BMW AG

Complete example: Covered Call on BMW (BMW.DE) — including strikes, premium, break-even, and interactive payoff diagram.

Market view
Neutral to mildly bullish
Complexity
Beginner
Sector
Auto
Typical price
€75,00
Underlying

BMW AG for Options Traders

BMW AG is one of the world's leading premium automakers and one of the most cyclical DAX companies. The stock reacts strongly to China sales data, interest rate changes, and commodity prices, occasionally pushing IV to 35-38%. With an attractive dividend yield (~5%) and a share price below €100, BMW is accessible even for smaller options accounts. Bull call spreads during economic upswings or iron condors after sharp corrections are typical strategies.

Symbol
BMW.DE
Market
DAX
IV range
22–38%
Currency
EUR
Options note: Traded on Eurex; good liquidity in the automotive sector; European-style options; strikes in €1 increments at lower price levels.
Overview

Covered Call — Quick Overview

In a covered call, you sell a call option against shares you already own. You immediately receive a premium credited to your account, regardless of how the stock moves. In return, you agree to sell your shares at the strike price if the option goes in-the-money at expiration. This strategy is ideal for investors who want to generate regular income from existing positions in flat to mildly rising markets.

Advantages

  • Immediate cash flow from premium received
  • Effectively reduces the cost basis of the stock
  • Maximum loss clearly defined (stock can only fall to zero)
  • Simple to implement — ideal for options beginners

Disadvantages

  • Caps upside: profit potential above the strike is surrendered
  • No full downside protection if the stock falls sharply
  • Dividend rights remain but early assignment risk around ex-dividend date
  • Eurex options on DAX stocks often less liquid than US options
Full Covered Call Guide
Example Trade

Covered Call on BMW

Illustrative example based on a typical BMW price of €75,00. Strikes and premiums are indicative — actual market prices will vary.

PositionTypeStrikeActionPremium
100 Shares (held)Stock position€75,00Long (entry price)—
Short Call (sold)Call€80,00Sell (credit)+€1,13
Net credit received+€1,13 (€113 per contract)
Max Profit
€613
per contract
Max Loss
-€7.387
per contract
Break-even
€73,87
Payoff

Payoff Diagram at Expiration

Profit and loss of the Covered Call on BMW depending on the price at expiration. Values per contract (100 shares).

Suitability

Why Covered Call for BMW?

Medium volatility creates attractive covered call premiums of 1.5-2.5% monthly — sufficient for an annual additional yield of 18-30% on the position. Especially after strong price rallies when IV is slightly elevated, premiums are particularly attractive. Watch for upcoming quarterly earnings: avoid selling calls right before an earnings event.

When is the right time?

  • 1IV Rank above 30% — higher IV means richer premiums
  • 2Neutral to mildly bullish outlook on the underlying
  • 3Already holding a stock position in the account
  • 4Willingness to sell shares if the stock rallies to the strike
  • 5No upcoming earnings event within the option term
FAQ

FAQ: Covered Call on BMW

How do I choose the right strike for a covered call?
The strike should be 3-8% above the current price (out-of-the-money) so you can still participate in some upside. A popular approach is the 30-delta rule: choose the strike where the option delta is around 0.25-0.35. Higher strikes offer less premium but allow more upside. Lower strikes provide more premium but increase the likelihood of assignment.
When should I roll a covered call?
Rolling makes sense when the option is moving toward the money and there are 7-14 days until expiration. You buy back the old call and sell a new one with a later expiration and possibly a higher strike. A common rule: roll when the sold option shows a loss of 150-200% of the original premium. Never roll just to hide a loss — if the stock fundamentals have deteriorated, close the position entirely.
What happens if my stock rises above the strike and I get assigned?
For American-style options (US stocks), assignment typically happens only at expiration. Your 100 shares are sold at the strike price and you keep the full premium. Your total gain is (strike − purchase price + premium) × 100. For European-style options (e.g., SAP options on Eurex), settlement only occurs at expiration — no early assignment is possible.
Do covered calls work on DAX stocks too?
Yes, covered calls on German stocks like SAP, Allianz, or Siemens are tradeable on the Eurex. Liquidity is decent for major DAX stocks but typically lower than US options. Bid-ask spreads are wider, slightly reducing effective premium. Eurex single-stock options are generally European-style with physical settlement — always check your broker's contract specifications.
How much premium can I realistically expect from covered calls?
For stable stocks with lower IV (15-25%), expect typically 0.5-1.5% of stock value per month. For more volatile stocks (IV 30-50%), it can be 2-4%. Annualized, this represents 6-18% in additional yield. These premiums are not guaranteed and vary greatly with market volatility. In calm markets (VIX below 15), premiums drop significantly.
More underlyings

Covered Call on other stocks

SAP
SAP
DAX
IV 18–30%
ASML
ASML
EU
IV 26–48%
Siemens
SIE.DE
DAX
IV 17–28%
Allianz
ALV.DE
DAX
IV 14–25%
Mercedes
MBG.DE
DAX
IV 20–35%
Deutsche Bank
DBK.DE
DAX
IV 28–55%
Adidas
ADS.DE
DAX
IV 22–38%
Deutsche Telekom
DTE.DE
DAX
IV 14–22%
All 30 Covered Call examples
Alternatives

Other strategies for BMW

Iron Condor
Sideways income with defined risk
Cash-Secured Put
Buy stocks cheaper or collect premium
Butterfly Strategy
Precision trading for low volatility

Want to try this strategy yourself?

Use our free options tools for your own calculations — or discover more strategies on BMW and other underlyings.

Open Payoff CalculatorAll Strategies