A common misconception made by many retail investors is that they make more money selling longer-dated options because the dollar amount is so much greater than shorter-dated choices. This article will provide an analysis to refute this fallacy. A real-life example with NVIDIA Corp. (Nasdaq: NVDA) will be studied but any stock or ETF can be used with the same results.
NVDA analysis on June 4, 2025
- NVDA trading at $141.39
- The 6/6/2025 $144.00 call has a bid price of $0.72
- The 7/3/2025 $144.00 call has a bid price of $4.70
- The 6/18/2026 $144.00 call has a bid price of $27.20
Can you see how enticing that 6/18/2026 premium can be for retail investors? Me too.
NVDA 3-option-chains on 6/4/2025
NVDA initial calculations of the 3 expiration dates using the BCI Trade Management Calculator (TMC)
- The shortest-term 6/6/2025 expiration shows an initial 3-day return of 0.51%, 61.96% annualized
- The 30-day initial return is 3.32%, 40.44% annualized
- The longest-term, 380-day LEAPS initial return is 19.24%, 18.48% annualized
We must avoid the “shiny object” dollar amount return from long-dated options and focus on the annualized returns.
Discussion
Shorter-dated options will provide the opportunities for the greatest annualized returns. Other advantages include allowing us to re-evaluate our bullish assumptions on the underlying securities more frequently and assisting us in avoiding earnings reports and ex-dividend dates.
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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:
Good evening, Alan and Barry,
1. Orlando Money Show
Orlando Resort @ ChampionsGate
October 16 – 18, 2025
- Opening ceremony keynote address
- 45-minute workshop class: Traditional & Low-Risk Covered Call & Cash-Secured Put Trades
2. 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
Registration link to follow.
3. BCI Educational Webinar #9
Thursday January 15, 2026
8 PM ET – 9:30 PM ET
Topic, description and registration information to follow.
4. 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.
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.
Hi Alan,
Thanks for your answer toon my previous question. That was very helpful.
Can you help me out with another position? (There are no tax issues in NL).
I bought KGC long time ago at about 3,30 per share for 300 shares.
I have 1000 shares now collected on the way up with various price ranges. The latest purchase was at around 21.
Now, of course i sold options on it and kept on rolling.
Now I ended up having sold the following options:
6 contracts for the nov 21’25 25call worth: 2,01.
4 contracts for the febr 20’26 24 call worth: 3,88.
I think i just hit my limit with rolling?
What is the best to do now since the stock is keep going up? Rolling with a credit is almost impossible now…
Kind regards from NL
Bas
Bas,
I cannot give specific financial advice in this venue, but I will make some comments you should find helpful.
• Given that there are no tax-related issues, share retention is not critical, so the calculations will dictate whether rolling makes sense. Use the “Unwind Now” worksheet tab of the Trade Management Calculator (TMC) or the main spreadsheet itself to make these calculation determinations.
• When there are no tax concerns, it’s not the stock that’s important to us, but rather the cash we have invested in it.
• Avoid falling into the trap of rolling-out deeper in time to make rolling calculations work. Greater annualized returns are realized with shorter-dated options.
• The 11/21/2025 and 2/20/2026 dates go through both earnings reports and ex-dividend dates which complicate the trades, especially the ERs (next one is 11/5/2025).
• KGC has a high implied volatility so extreme price movement in either direction should be factored in. This also accounts for the generous returns which come with greater risk to the downside.
• Before we enter trades, we should have a gameplan in place. What will I do if share value goes down a lot? What will I do if share price goes to the moon? Rolling may or may not be the best path to take.
• If you decide that you want to avoid the 11/5 ER date, the option positions should be closed prior to 11/5. Shares can be retained or sold, depending on your confidence in the report outcome and your personal risk tolerance. You can also choose to sell some shares and retain the rest.
• You’ve done quite well with this stock, and these trades serve as valuable learning experiences.
Alan
Hi Alan,
I bought the Blue Collar program late last year and after doing a ton of reading and learning I started actively trading 14 weeks ago. I recently retired so I have a lot more free time than before so I have time to do weekly options.
I’m curious to know how you benchmark your performance against the market. I had a long career in Finance and Accounting and we constantly benchmarked our company’s performance against industry metrics or against other locations within our company.
Through 14 weeks here’s where I’m at – my average weekly return using the TMC is 0.65% which annualizes out to about 34%. Each Monday I document the S&P 500 index value at 11 AM when I start entering my trades. I then take the Friday closing price of the S&P 500 and determine the net increase or decrease in the index from 11 AM Monday to the 4 PM close on Friday. Through 14 weeks the index is up on average 0.56% per week or 29% annualized. So I’m beating the average by about 0.09% per week or about 5% per year.
Is there any data that is either available online or information that you have at your disposal that would be a good benchmark (other than the S&P 500) for us members to use to see how we are doing? Obviously 14 weeks of data is a really small sample size so I was hoping you might be able to share some data that you may have that goes back for a longer period of time. Basically I’m trying to see how I’m doing and where I might need to improve. I’ve been doing a lot of ITM strikes early in the 14 week period and lately I’ve been doing closer to 50/50 ITM and OTM each week. In the 14 weeks I’ve made money in 12 of the weeks and lost money in only 2 of the weeks so I’m pleased with the progress, but of course the market has been up during the period as well.
Really appreciate any guidance you could provide in terms of benchmarking so that I can give myself a “report card” 14 weeks into the process.
Thanks for all that you do for us!
Andrew
Andrew,
Congratulations on your recent success … you’re off to a terrific start.
The 2 benchmarks most commonly used to compare investment results are the S&P 500 and risk-free returns (Treasuries), now about 4.5% annually.
I use the S&P 500. There has never been a year, in the 30-years I’ve been selling options, that I haven’t out-performed the S&P 500 and many years quite significantly.
In my 9th book (I know you have all my books), “Covered Call Writing: A Streamlined Approach” I archived every trade I made in 2022 using this blueprint, demonstrating how I beat the market by > 15%.
You also have 2 BCI spreadsheets that may meet your needs:
1. The TMC: In the middle section, scroll down and in the green cells you will see post-adjusted trade results for your entire portfolio. We can easily track the S&P 500 during that timeframe and compare. I save each TMC spreadsheet and name it based on contract expiration date. For example, TMC_10-17-2025. Always retain a blank copy and rename a new one based on expiration date or any other nomenclature you prefer.
2. The Portfolio Setup and Portfolio Returns Spreadsheets which are part of the CEO Package. There you can archive your results and compare to the S&P 500 on 1 page.
One final thought: Your brokerage account will reflect the total portfolio value at every point in time. Just note your starting point and current value and compare to 1 of the 2 benchmarks.
I wish for you (and all our members) similar results that I have realized over the past 3 decades.
Alan
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 10/03/25.
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:
https://www.youtube.com/user/BlueCollarInvestor
Barry and The Blue Collar Investor Team
Premium members:
This week’s 4-page report of top-performing ETFs, along with our sample trade of the week, 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.
We have also included a sample trade taken from one of our BCI watchlists.
Premium member video link:
https://youtu.be/EXMO-KwZuJs
For your convenience, here is the link to login to the premium site:
https://www.thebluecollarinvestor.com/member/login.php
NOT A PREMIUM MEMBER? Check out this link:
https://www.thebluecollarinvestor.com/membership.shtml
Alan and the BCI team