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We enter a covered call trade and share price declines, but not enough to trigger our 20%/10% BTC/ GTC limit orders (exit strategy buyback price points). The option expires worthless.

There may be confusion on 2 fronts: How do we calculate our returns, given we still own the depreciated shares and what share price entry do we use if we sell another covered call on the stock in the next contract cycle.

In this article, a real-life example with Skyward Specialty Insurance Group Inc. (Nasdaq: SKWD), will be analyzed to offer a reasonable solution (I hope you agree with the adjective) to both questions.

Initial trades with SKWD

• 5/12/2025: Buy 100 x SKWD at $59.75
• 5/12/2025: STO 1 x 6/20/2025 $60.00 call at $3.31
• 6/20/2025: SKWD closes at $57.33 as the contracts expire worthless
• What are the final realized/unrealized returns?
• How do we enter the stock price if we sell another covered call for the next contract cycle?

Final realized/unrealized returns on 6/20/2025, using the BCI Trade Management Calculator (TMC)

• The top row shows initial trade entries
• The 2nd row from the top shows initial trade calculations
• The 3rd row from the top shows the exit strategy allowed (“expire worthless”) and expiring share price
• The bottom row calculates the final unrealized share loss of 4.05% and realized option gain of 5.54%
• The net realized/unrealized gain is $89.00/contract or 1.49% 40-day return (brown cells on the bottom)

Discussion at contract expiration

• The shares can then be sold at a, now, realized net profit or we can write another covered call for the next contract cycle
• The next strike can be ITM or OTM depending on whether we decide to take a defensive or more aggressive posture
• If we decide to retain the shares, our price entry into the next TMC spreadsheet will be $57.33, because the share loss to-date is already in the previous contract calculation

***To manage these and all exit strategy scenarios, click here for our BCI product package.

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Free E-book on covered call writing

Use in conjunction with our Beginners Corner free video series on covered call writing (Free training link above)

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Your generous testimonials

Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to publish several of these testimonials in our blog articles. We will never use a last name unless given permission:

1. Money Masters Symposium Sarasota Florida

December 1 – 3, 2025

Setting Up Option Portfolios Using Stock Selection, Diversification, Cash Allocation and Calculations

Analysis of 6 covered call writing trades

Minimize risk and maximize returns. These are our 2 main goals when crafting our option portfolios. There are several factors we can utilize which will put ourselves in an outstanding position to achieve these objectives. Here is a summary of those factors which will be addressed during this presentation:

• Select elite-performing stocks and ETFs
• Diversity stock positions as well as their industries
• Allocate a similar amount of cash per position
• Ensure that initial calculations align with strategy goals and personal risk-tolerance
• Once trades are entered, go into position management mode- be prepared for exit strategy opportunities

Register here.

2. BCI Educational Webinar #9

Thursday January 15, 2026

8 PM ET – 9:30 PM ET

Watch a video overview of the webinar.

Reserve a seat and register now by clicking here.

3. Long Island Stock Investors Meetup Group: Part I

Thursday February 12, 2026

7:30 PM ET – 9:00 PM ET

Topic, description and registration information to follow.

4. Las Vegas Money Show

February 23 – 25, 2026

The Collar Strategy: Covered Call Writing with Protective Puts

Protecting covered call trades from catastrophic share loss 

This is the strategy Bernie Madoff pretended to use. He called it the split strike conversion strategy, but it was simply a collar. The covered call sets a ceiling on the trade and the protective put guarantees a floor on the trade

Topics discussed

• What is the collar strategy?
• Uses for the collar
• Entering a collar trade
• Option basics for calls
• Option basics for puts
• Real-life example with NVDA
• What is an option-chain?
• Real-life example using the BCI Trade Management Calculator (TMC)
• Strategy pros & cons
• Educational products & discount coupon
• Q&A

Time, Daste & Registration link to follow.

5. Long Island Stock Investors Meetup Group: Part II

Thursday March12, 2026

7:30 PM ET – 9:00 PM ET

Topic, description and registration information to follow.

6. Hollywood Florida Money Show

The Put-Call-Put (PCP) or Wheel Strategy

Using Both Covered Call Writing and Put-Selling to Generate Monthly Cash Flow

Selling stock options is a proven way to lower our cost-basis and beat the market on a consistent basis. Two such low-risk strategies are covered call writing and selling cash-secured puts. This presentation will detail how to incorporate both strategies into one multi-tiered option-selling strategy where we either generate cash-flow or buy a stock at a discount. I refer to this as the Put-Call-Put (PCP) Strategy, also referred to as the wheel strategy.

The basics and pros and cons of low-risk option-selling strategies will be discussed as well as an analysis of a real-life example and introduction into the BCI Trade Management Calculator (TMC). This seminar is appropriate for those who look to generate modest, but consistent, returns which will enable us to potentially beat the market on a consistent basis while focusing in on capital preservation.

More details to follow.