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Ask Alan #188: Managing a Deep In The Money Covered Call Trade

Alan answers a question posed by Jim, who asks:

Can one wait too long when ITM options go too deep ITM? On 1/5/21, I bought RIOT for $17.14 and sold the 2/19 $14.00 call for $5.65. On 2/15 the stock was at $48.06. Should I have rolled-up sooner as the stock was gaining value?
Thank you,

It’s the 2nd Wednesday of the month. Time for another original episode of Alan. AA#188, Managing a Deep In The Money Covered Call Trade” href=”” target=”_blank” rel=”noopener noreferrer”>Become a premium member today, and tune in to the educational power of the complete library!

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

3 Responses to “Ask Alan #188: Managing a Deep In The Money Covered Call Trade”

  1. joanna November 16, 2021 2:45 pm #

    Just wanted to tell my recent MCU experience with QCOM. I wasn’t expecting such a large upswing today, but I profited nicely, so I’m surely not complaining. It’s a win! I bought 100 shares of QCOM on 11/8/21 at 166.86. Then I STO the 11/26/21 170 call for 3.88. Today, because of some good news that came out about the company, the shares exploded by about 7%. I unwound the entire trade by BTC the call at 11.70, then selling the shares at 180.23. Overall profit was 554.97. I now have capitol freed up to enter another covered call mid-cycle. Thank you, Alan for all of your great wisdom with this strategy.

    • Alan Ellman November 17, 2021 7:33 am #


      Very well done. Focusing in on exit strategies, after a trade is initiated, is what separates pretty good option-sellers from the outstanding ones.

      In the screenshot below, using the “Unwind Now” tab of the Elite-Plus Calculator, we see a time-value cost-to-close of 0.86%. Our goal is to generate at least 1.86% by 11/26.

      Keep up the excellent work.



      • Alan Ellman November 17, 2021 7:56 am #


        I also noticed how you avoided the 11/3 earnings report… even better…

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