How much of your portfolio should run covered calls? Mark Yegge breaks down position sizing rules: core income sleeve, account size tiers, and the circuit breaker rule.
How much of your portfolio should run covered calls? Mark Yegge breaks down position sizing rules: core income sleeve, account size tiers, and the circuit breaker rule.
A covered call payoff diagram is the simplest tool in options trading. Here is how to draw it, read it, and use it to manage every covered call income trade.
Sell to open is the order action that starts every covered call income trade. Here is how it works, why it matters, and a real example with dollar amounts.
TL;DR Covered call breakeven calculation tells you the price your stock can drop to before the position turns into a net loss. The formula is simple: breakeven = stock cost basis – premium received per share. Maximum profit = premium received + (strike price – cost basis) when shares are called away above the strike.… Continue reading How to Calculate Covered Call Breakeven, Return, and Maximum Profit
TL;DR Rolling covered calls up and out means buying back the current short call and simultaneously selling a higher strike, longer dated call as a single spread order. The goal is almost always a net credit, more upside on the shares, and an extended income runway. The cleanest moment to roll is when the original… Continue reading How to Roll Covered Calls Up and Out: The Complete Guide to Rolling Mechanics
TL;DR Covered call delta selection is the single most important decision you make on every trade. It determines income, assignment risk, and how much upside you keep. 0.20 delta keeps the shares (about 80 percent retention rate) but pays modest premium of 6 to 8 percent annualized. 0.30 delta is the income sweet spot for… Continue reading How to Use Delta to Select the Perfect Covered Call Strike
TL;DR Options Greeks for covered call writers come down to four numbers that decide your monthly income: Delta, Theta, Vega, and Gamma. Delta sets your assignment probability and strike selection. A 0.30 to 0.40 delta is the standard income-focused sweet spot. Theta is the daily rent the option buyer pays you. The 30 to 45… Continue reading Options Greeks Explained for Covered Call Writers: Delta, Theta, Vega
If You Own Apple Stock and You’re Not Selling Covered Calls, You’re Leaving Money on the Table Apple is one of the most widely held stocks in the world. Millions of investors have AAPL sitting in their accounts as a long-term anchor position — collecting dividends, appreciating quietly, and otherwise doing absolutely nothing for their… Continue reading AAPL Covered Calls: A Step-by-Step Example Using Apple Stock
Most People Overcomplicate Covered Calls — Here’s the Simple Truth I’ve been selling covered calls for over 40 years, and if there’s one thing I’ve learned, it’s this: the strategy itself is straightforward. You own shares, you sell a call option against them, and you collect income. That’s the core of it. Yet most beginners… Continue reading Selling Covered Calls for Beginners: A Complete Step-by-Step Guide
“My Shares Got Called Away!” — Why Assignment Isn’t the Disaster You Think It’s the phone call every new covered call seller dreads. You check your brokerage account one morning and see: Assignment Notice — 100 shares sold at strike price. Your first reaction? Panic. “Did I lose money? What do I do now? Is… Continue reading Covered Call Assignment: What Happens When Your Shares Get Called Away (And Why It’s Usually a Good Thing)
