A good setup against a bad one
The checks that separate a workable premium-selling trade from a bad one are public, boring and mostly about execution: liquidity, the distance to the strike, whether an event sits inside the window, and whether you would own the shares. None of them is worth more than the others, and anybody who tells you the weights is guessing.
Three candidates from the same screen, run through the same list.
The checks
These are textbook criteria. Every options educator publishes some version of them, they are not proprietary and there is nothing clever about the list. Its value is that it is fixed, so you cannot rearrange it after the fact to justify a trade you already wanted.
Deliberately unranked and unweighted. There is no score at the bottom of the table and no ordering that implies importance. Any weighting scheme published on a page like this would be somebody's opinion presented as arithmetic. OptionsKing scores candidates differently and privately, and what this page shows you is not that. It is the set of checks you can run by hand on any shortlist, with the results on three real contracts.
The three candidates
- CSCO $64 call. Stock $58.40, 45 days, 28 percent IV, $62 credit, delta 0.203, market $0.58 by $0.66.
- RIVN $15 call. Stock $13.40, 45 days, 62 percent IV, $61 credit, delta 0.350, earnings inside the window.
- PARA $12.50 call. Stock $11.20, 45 days, 46 percent IV, $30 mid, delta 0.285, market $0.20 by $0.40.
By annualized return the ranking is RIVN at 37.1 percent, PARA at 21.7 percent, CSCO at 8.6 percent. Hold onto that.
| Check | CSCO | RIVN | PARA |
|---|---|---|---|
| Would you hold 100 shares for 45 days | your call | your call | your call |
| Open interest above 500 | pass, 7,410 | pass, 9,880 | pass, 1,840 |
| Traded today | pass, 688 | pass, 2,140 | fail, 12 |
| Spread under 15% of mid | pass, 12.9% | pass, 9.8% | fail, 67% |
| Delta inside your band | pass, 0.203 | pass, 0.350 | pass, 0.285 |
| Credit worth the commissions | pass, $62 | pass, $61 | marginal, $20 at the bid |
| No earnings before expiry | pass | fail | pass |
| No ex-dividend problem in the window | pass | pass | pass |
| Position size within your rules | $5,840 | $1,340 | $1,120 |
Reading it
The two highest-yielding candidates fail on a check a screener runs in a millisecond, and the lowest-yielding one passes everything.
That inversion is the whole page. Premium is compensation, so ranking by premium ranks by how much compensation the market thinks the risk deserves. It is not a discovery of mispricing, and a list sorted by annualized return is a list sorted by everything that went wrong with the other two contracts.
RIVN fails on one line. Everything else about it is fine: liquid chain, tight enough spread, sane delta, real credit. It has an earnings print inside the window, and $30 of that $61 credit is the print. Selling it is not a covered call trade, it is an earnings trade with a covered call attached, and it should be priced and sized as one.
PARA fails on execution. Twelve contracts traded and a 67 percent spread. The 21.7 percent annualized return is computed off a mid nobody will pay you; at the bid it is 14.5 percent, and closing it early would cost two thirds of the original mid. The full arithmetic is on the liquidity page.
The check that is not really a check
Look at the top row. Three "your call" entries, and it is the only row that can veto a trade on its own.
A covered call is 100 shares plus a short call, and the shares are the larger position by a factor of about ninety. If CSCO drops to $48 you have lost $1,040 on the stock and collected $62. No screen, checklist or score has an opinion on whether you should own Cisco, because that is not a question about the option chain.
This is why "the screen found it" is never a reason. The screen found a contract. You are buying a company.
Why nine unweighted checks and not a score
Because a weighting is a claim, and it needs evidence nobody publishing a free article has.
Say liquidity is worth twice as much as the delta band. On what data, over which regimes, measured against what outcome? The honest answer for any list like this is that the weights were chosen because they felt right, and presenting them as a number would dress up an opinion as a measurement.
So this page gives you pass and fail, and leaves the trade-offs where they belong. A contract that fails the earnings line and passes everything else might still be a trade you want, with a smaller size and open eyes. That is a judgement. Writing it as 74 out of 100 would not have made it less of one.
OptionsKing scores every candidate strike on a deterministic 0 to 100 scale, blends that score with the return on the capital the trade ties up, and shows you the highest-ranked handful. There is no minimum score. How it works covers what the ranking does and does not tell you.
Questions people actually ask
How do I know if an options trade is a good setup?
Run a fixed list of textbook checks: liquidity, spread, delta band, credit against costs, no earnings inside the window, position size, and whether you would hold the shares. On a worked comparison the two highest-yielding candidates failed on liquidity and earnings, and the lowest-yielding one passed everything.
Does a higher premium mean a better trade?
It means the market is charging more for the risk. On the worked screen the 37.1 percent annualized candidate had an earnings print inside the window and the 21.7 percent one had a 67 percent spread. The 8.6 percent candidate was the only one that passed every check.
Should I weight the checks on a trade checklist?
Not on a public checklist. A weighting is a claim that needs evidence, and any set of weights in a free article was chosen by feel. Pass and fail against fixed criteria is honest. A score out of 100 dresses up the same opinion as a measurement.
What is the one thing a screener cannot check?
Whether you want to own the stock. A covered call is 100 shares plus a short call, and the shares are roughly ninety times the size of the option. No filter has a view on the company, and that is the position that decides the outcome.
Sources
Rules and thresholds above were checked against these documents on August 4, 2026. Exchange and broker rules change. Confirm anything you are about to act on with your own broker.
Keep reading
Do the math on your own trade
Every price in this article is an illustrative worked example, not a quote. Read Screening and probability for the rest of the series, and the disclaimer before you act on any of it. Selling options carries real risk of loss, and the loss can be far larger than the premium you collected.