In previous publications, laddering covered call strikes with the same expiration dates was discussed. This article will address scenarios when the ITM strikes remain ITM and the OTM strikes remain OTM at expiration. A real-life example with Alamos Gold Inc. (NYSE: AGI) will be analyzed.
AGI 5-day trade
- 12/15/2025: Buy 400 x AGI at $38.08
- 12/15/2025: STO 1 x $40.00 OTM call at $0.20
- 12/15/2025: STO 3 x $37.00 ITM calls at $1.45
- Pre-stated initial weekly time-value return goal range is 1/2% to 1% for both ITM & OTM strikes
Initial Covered Call Trade Calculations: BCI Trade Management Calculator (TMC)
- Red oval: 5-day trade
- Yellow field: Breakeven price points
- Brown cells: Initial time-value returns for the OTM $40.00 strike
- Purple cell: Additional upside potential for the OTM call strike (potential 2nd income stream from share appreciation)
- Pink cells: Initial time-value returns for the ITM $37.00 strike
- Blue cell: Downside protection of the ITM time-value return
Trade status after Expiration on 12/19/2025
- AGI closed at $38.48
- This is $0.40 above the price at trade entry
- I allowed the 300 shares to be exercised at $37.00 for a net gain of $111.00
- I am holding 100 shares at an unrealized gain of $40.00 and an option realized gain of $20.00
- Total 5-day realized + unrealized gain = $171.00 = 82% annualized
Discussion
Just as we have the opportunity to use different strikes for the same underlying security with the same expiration dates, we also have the flexibility to allow or prevent exercise and assignment of our shares. I could have bought back and rolled the ITM strike prior to expiration but decided to allow exercise and retain the remaining 100 shares to then write a covered call the following week. In essence, I had 4 successful contract trades and took some money off the table for the next contract cycle.
Stock Repair Calculator
What is the stock repair strategy?
- Own shares at a price higher than current market value (unrealized loss)
- Willing to forego potential profit in exchange for lowering the breakeven price point
- Not willing to add additional funds to the current losing position
- Instead of buying shares at the lower price to “average down”, an at-the-money (near-the-money) call option is purchased and funded by selling 2 out-of-the-money call options
- 2 long positions (stock and ATM or NTM call)
- 2 short positions (OTM calls covered by long positions)
- This action will lower the breakeven price point
- The strategy does not protect against additional downside loss
- The strategy does cap the upside
Free training resources
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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:
New sample trade video:
1. BCI Educational Webinar #10: The Put-Call-Put (PCP) or “Wheel Strategy”
Thursday May 14, 2026, at 8 PM ET (LAST CHANCE TO REGISTER)
Using both covered call writing & cash-secured puts in a multi-tiered option selling strategy. A 68-day real-life example taken from one of Alan’s portfolios will be analyzed.
BONUS: Barry will share a real-life credit spread trade using our BCI Conservative Credit Spread Management System.
Discount coupons and a live Q&A session will follow the presentation.
Click here for more information and to register (scroll down).
2. Mad Hedge Investor Summit
June 3, 2026
12 PM ET – 1 PM ET
Covered Call Writing
Uncovering a 3rd Income Stream in Our Investment Portfolios
Increasing profits and avoiding tax issues using stock options
You have owned shares of stock in your non-sheltered accounts for many years. Share value has been appreciated significantly over time. This has put a smile on your face. Many of these securities have also generated dividend income. This, too, has pleased you. However, there is a 3rd income stream that you can activate right now, leveraging these same stocks, using a strategy known as covered call writing.
This is a low-risk option selling strategy analogous to generating rental income with a real estate investment property. Yes, renting out your stocks for limited periods. We have 2 goals: generate a 3rd income stream + retain the underlying shares to avoid negative capital gains issues.
This presentation will analyze how to implement this form of covered call writing, known as Portfolio Overwriting, always with capital preservation in mind.
3. American Association of Individual Investors: NYC Chapter
Date and time to be confirmed.
Via Zoom.
More information to come.
4. MoneyShow Masters Symposium Las Vegas
July 20 – 22, 2026
Caesars Palace Hotel
Las Vegas
Details to follow.
5. Toronto Money Show
September 24 – 25, 2026
MaRS Center, Toronto Canada
6. Orlando Money Show
October 5 – 7, 2026
Hilton Orlando Lake Buena Vista
Details to follow.
