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When crafting our covered call trades to offer greater protection to the downside, we favor in-the-money (ITM) call strikes. These provide lower breakeven price points because ITM strikes consist of both time-value and intrinsic-value. At-the-money (ATM) and out-of-the-money (OTM) strikes are all time-value.

When share price rises substantially during the contract, our maximum returns are well protected. But can we generate even more profit by executing one of BCI’s exit strategies? Of course, the answer is yes, or I wouldn’t be writing this article. A real-life example will be analyzed using Celestica Inc. (NYSE: CLS) and Datadog, Inc. (Nasdaq: DDOG) during a 5-day contract. In the BCI methodology, this exit strategy is known as the mid-contract unwind (MCU) exit strategy.

Overview of CLS (defensive covered call trade) and DDOG (traditional covered call trade) trades

• 6/23/2025: Buy 200 x CLS at $133.95
• 6/23/2025: STO 2 x 6/27/2025 CLS $128.00 calls at $7.15
• 6/25/2025: CLS trading at $149.24
• 6/25/2025: BTC 2 x 6/27/2025 CLS $128.00 calls at $21.80
• 6/25/2025: Sell 200 x CLS at $149.24
• 6/25/2025: Buy 200 x DDOG at $131.70
• 6/25/2025: STO 2 x $133.00 DDOG calls at $0.74
• 6/27/2025: DDOG trading at $132.08 at expiration
• 6/27/2025: The DDOG call options expire worthless
• The unrealized share profit is $0.38/share

CLS initial trade calculations with the BCI Trade Management Calculator (TMC)

• Breakeven price lowered to $126.80 (yellow cell)
• Initial time-value returns are 0.94%, 68.44% annualized (brown cells)
• If we allow exercise, shares are sold at the $128.00 strike price, a discount of 4.44% (purple cell)

CLS final trade calculations with the BCI Trade Management Calculator (TMC)

• After buying back the option at $21.80 and selling the shares (at $149.24), there is a loss on the option side, but a significant gain on the stock side
• The net gain per contract is$128.00 or 0.48% (brown cells)

DDOG initial trade calculations with the BCI Trade Management Calculator (TMC)

• This 3-day trade, resulted in an initial return of 0.56%, 68.36% annualized (brown cells)
• It also left the potential for an additional return 0.99% if share price moved to the OTM $133.00 call strike at expiration

What Happened on Expiration Friday (6/27/2025)?

• DDOG closed at $132.08 (purchased at $131.70)
• The $133.00 call expired OTM, and shares were retained
• Combined realized 5-day option return (both trades): 1.04%, 75.92% annualized
• There is an additional unrealized 3-day share profit for DDOG of 0.29%
• I will decide on Monday if I will sell the shares or write another covered call

Discussion

• Significant returns can be generated with 5-day defensive covered call trades
• Option trades can be crafted to align with all market environments and personal risk tolerance
• In the case of CLS, closing the trade and executing another covered call was a reasonable path
• In this example, the mid-contract unwind (MCU) exit strategy was executed, resulting in greater than an initial maximum return

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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

Topic, description and registration information to follow.

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

Details to follow.