Covered calls

A covered call is selling someone the right to buy 100 shares you already own, at a price you choose, for cash you keep no matter what happens. You give up everything above that price. Fourteen articles below, starting with one complete trade and ending with what the strategy actually costs over ten years.

• The covered call, end to endA covered call is selling someone the right to buy 100 shares you already own, at a price you pick, for cash you keep. One full trade from open to expiry, with the arithmetic shown at every step.
• The covered call payoff, in three zonesThe covered call payoff has three zones: below break-even you lose on the shares, between break-even and the strike you make the premium plus the gain, above the strike your profit is flat forever. Drawn and explained.
• Picking a strike: what each delta actually buysDelta is the fastest read on a covered call strike: roughly the chance it finishes in the money. What 0.10, 0.20, 0.30 and 0.50 deltas actually buy you in premium and cost you in assignment odds.
• Choosing an expiry: weekly, monthly or 45 daysWeeklies annualize best on paper and cost the most in spreads and attention. Monthlies are the liquidity sweet spot. Where the 45-day convention comes from and when it is wrong.
• Annualizing a covered call, correctlyHow to annualize a covered call return correctly, which capital base to divide by, and why the headline percentages in most screeners are not comparable to each other.
• Static return vs if-called returnStatic return is the premium alone if the stock goes nowhere. If-called return adds the share appreciation up to the strike. Both are real, they answer different questions, and quoting only one is how covered call yields get oversold.
• Covered calls on a stock you do not want to sellHow to write covered calls while keeping assignment risk genuinely low: strike distance, delta bands, expiry choice, and the honest answer about whether you should be writing calls on that position at all.
• Rolling a covered call: up, out, and up-and-outWhat rolling a covered call actually is, the three directions you can roll, how to tell whether the roll is worth it, and the net credit test that decides.
• When rolling a covered call is a mistakeRolling feels like management and is often avoidance. The four situations where letting the shares go, or taking the loss, beats rolling the position forward again.
• Covered calls and dividendsWhy call holders exercise early the day before an ex-dividend date, how to see it coming from the remaining time value, and the IRS rule that can cost you qualified dividend treatment.
• The covered call ladderWith 300 or more shares you can write several contracts at different strikes and expiries instead of one block. What laddering actually buys you, and when it is just extra commissions.
• Covered calls vs just holding: the honest comparisonCboe publishes an index that sells at-the-money S&P 500 calls every month. Over the last ten years it returned 7.91 percent annualized against 15.50 percent for simply holding the index. The numbers, and what they do and do not prove.
• The poor man's covered call, and what it really costsA diagonal spread that mimics a covered call for a fraction of the capital. How it is built, why the capital saving is real, and the four risks that make it a genuinely different trade.
• Covered calls into earningsEarnings inside your expiry window inflates the premium and the gap risk at the same time. How to decide whether the extra credit is worth it, and the expiry choice that sidesteps the question.

Read them in this order

If you are new to this, three pages get you to the point where you can place one sensibly: the trade end to end, then picking a strike, then choosing an expiry. Everything else is refinement.

If you have been doing this a while and want the pages that change decisions rather than explain vocabulary: when rolling is a mistake, early assignment around ex-dividend dates, and the ten-year comparison.

What this series will not tell you

That covered calls are free money on shares you already own. They are not. You are selling your upside for cash, the exchange is roughly fairly priced, and over the last decade the strategy returned about half what simply holding the index did. That number is on the page rather than buried, because a series that hid it would not be worth reading.

It also will not explain how the OptionsKing confidence score is computed. The gate guarantee is public and the computation is not: nothing below 60 is ever surfaced, 75 is the recommended bar, and how it works covers what that means.

Questions people actually ask

Run your own numbers

• Covered call calculator premium, break-even, static and if-called return, annualized.
• Assignment probability calculator delta to keep-odds.
• Roll analyzer whether rolling is worth it.
• Per-ticker covered call data dated snapshots across 60 liquid names.