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Comparing Covered Call Writing & Cash-Secured Puts in Bull Market Environments

Covered call writing versus cash-secured puts in bull markets … which is better? This article will present the arguments for both and make a case why I prefer covered call writing in favorable, uptrending market conditions.

The case for cash-secured puts (CSP)

CSPs generate an initial premium return plus allow us to roll-up deep out-of-the-money (OTM) puts when share price appreciates significantly. This permits us to generate additional time-value premium over-and-above the original premium. See chapter 25 in my book, Exit Strategies for Covered Call Writing and Selling Cash-Secured Puts for a real-life example with INMD.

The case for covered call writing (CCW)

In bull markets, we sell OTM calls which allow for initial time-value premium plus the opportunity to take advantage of share appreciation from current market value up to, but not beyond, the OTM strikes. If share price rises exponentially, we can implement the mid-contract unwind (MCU) exit strategy which creates the opportunity to generate greater than a maximum return with the same or similar cash investment and a new underlying security. See chapter 7 in my book, Exit Strategies for Covered Call Writing and Selling Cash-Secured Puts for a real-life example with NUE.

Delta is the common denominator

When comparing the 2 strategies, we must keep in mind that stocks and ETFs have Deltas of 1. Option Deltas are lower. If share price accelerates by $1.00, our portfolios will benefit by $1.00 for each share owned with covered call writing, up to the OTM strike price. If share price accelerates by $1.00, put premiums will decline by its Delta value, let’s say $0.40 for an OTM put strike, as an example. This allows us to buy back the original put strike and roll-up to a higher strike, for a net credit. Will that credit equate to $1.00 per-share? Unlikely.

Real-life example with Intel Corp. (Nasdaq: INTC): 2/13/2023 – 3/17/2023

INTC trading at $27.90

INTC Option-Chain on 2-13-2023 for Calls & Puts

Note the following:

  • The initial time-value premium is greater for the $27.50 OTM put ($1.00) than for the OTM $30.00 call ($0.42) because the call is deeper OTM
  • With INTC trading at $27.90, there is opportunity to benefit by $2.10 per-share using the $30.00 strike (total potential return = $0.42 + $2.10 = $2.52)
  • Put initial return is $1.00. Can we generate an additional $1.52 by rolling-up put options? Unlikely

Hypothetical scenario where INTC increases in value to $29.40 by expiration

  • Total covered call unrealized (shares not yet sold) return = $0.42 + $1.50 = $1.92
  • The cost-to-close the $27.50 put will be < $1.00, perhaps $0.60 (deducting $0.40 from the original premium, assigning a Delta of -0.4 for the put)
  • Rolling-up will result in a net credit, but not close to $0.92, the amount we would need to match the covered call trade
  • Another factor against the put case, is that Theta (time-value erosion) is working against us as we try to compensate for the share appreciation on the call side with premium credits on the put side

What if INTC moves up dramatically allowing us to roll-up our puts multiple times?

This is great news for the put-seller as we can implement our rolling-up strategy several times to generate multiple time-value credits. However, we have our MCU opportunity on the call side, so I would consider this scenario a wash.


If our outlook for the market is bullish, both covered call writing and selling cash-secured puts with rolling-up opportunities can both represent successful trades. However, covered call writing OTM strikes will present the greatest upside in these conditions.

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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.

8 Responses to “Comparing Covered Call Writing & Cash-Secured Puts in Bull Market Environments”

  1. Shelly August 19, 2023 4:02 pm #


    A few on my puts were exercised today and I plan to write covered calls on Monday.

    What price do I enter into the TMC? Exercise price? Price on Friday? Monday’s price?


    • Alan Ellman August 20, 2023 8:34 am #


      When using the Trade Management Calculator, the price of the security at exercise is entered into the exit strategy section with “allow exercise” selected. This is the price we enter into the covered call section for the next contract cycle. The loss from $72.50 to $71.00 is archived in the initial contract cycle.

      Let’s say BCI is trading at $75.00, and we sell the $72.50 OTM put for $2.00 and allow exercise with BCI trading at $71.00.

      See the screenshot below for initial entries, calculations, final entries and calculations.



  2. Barry B August 19, 2023 11:29 pm #

    Premium Members,

    This week’s Weekly Stock Screen And Watch List has been uploaded to The Blue Collar Investor Premium Member site and is available for download in the “Reports” section. Look for the report dated 08/18/23.

    Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them on The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:

    Please check this blog later on Monday for an update on PANW’s status.

    Reminder: Premium members are grandfathered into your current rate and will never see a rate increase as long as the membership remains active.


    Barry and The Blue Collar Investor Team

  3. Barry B August 20, 2023 9:57 pm #

    Premium Members…

    Check out the article in Market Watch that discusses the Palo Alto Networks (PANW) Friday after-market close earnings report issue. The link is:

    I’ll update the Weekly Report after the market close tomorrow (Monday, 08/21/23).



    • Barry B August 21, 2023 4:39 pm #

      Premium Members,

      The Weekly Report has been revised and uploaded to the Premium Member site. Look for the report dated 08/18/23-RevA. The revised report has the updated details for PANW, per my previous post.


      Barry and The Blue Collar investor Team

  4. Bert August 22, 2023 5:33 am #


    On a day like yesterday when the Dow was down and the S&P was up, do you consider it an up day, down day or neutral day for the stock market?


    • Alan Ellman August 22, 2023 1:53 pm #


      When analyzing market movement, my focus is on the S&P 500, not the Dow 30. Most investors consider the S&P 500 “the market”.

      The main reason is that it incorporates 500 corporations, with about 505 stocks (a few have Class A and Class B, as an example). The Dow 30 contains 30 (surprise!). If 1 or 2 Dow 30 stocks get hit hard, the entire index is impacted, whereas a couple of significant price declines in the S&P 500 will not be as detrimental.

      Another reason is that the SPX is market-cap weighted, whereas the Dow 30 is price-weighted.


  5. Alan Ellman August 23, 2023 4:53 pm #

    Premium members:

    This week’s 4-page report of top-performing ETFs has been uploaded to your premium site. The Select Sector SPDR section is now crafted to align with our streamlined (CEO) approach to covered call writing. The report also lists Top-performing ETFs with Weekly options, mid-week market tone as well as the implied volatility of all eligible candidates.

    Premium member video link:

    For your convenience, here is the link to login to the premium site:

    NOT A PREMIUM MEMBER? Check out this link:

    Alan and the BCI team

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