It is never too late to implement covered call exit strategy opportunities. In this real-life example with Howmet Aerospace Inc. (NYSE: HWM), a defensive covered call trade was rolled-down during a holiday-shortened week. Price movement for HWN was, unexpectedly, volatile during this brief contract.
Real-life example with HWM
- 6/30/2025: Buy 200 x HWN at $185.40
- 6/30/2025: STO 2 x 7/3/2025 $180.00 calls at $5.97
- 7/2/2025: BTC 2 x 7/3/20$180.00 calls at $0.60 (10% BTC guideline)
- 7/2/2025: STO 2 x 7/3/5 $177.50 calls at $1.15 (rolled-down)
- 7/3/2025: The 7/3/2025 $177.50 strike expires ITM, and shares are sold at that $177.50 strike price (market closed at 1 PM ET due to the July 4th holiday)
HWM: Volatile price chart for the week of the 7/3/2025 expiration
- The dramatic whipsaws that week was related to HWM being removed from 2 Russel indexes (3000 and 1000 value indexes), resulting in shares having to be sold
- The price decline triggered the 10% BTC/GTC limit order
- Rolling-down was the path selected to mitigate losses
Broker screenshots of initial and rolling-down trades
- #1: Shares purchased
- #2: Options sold
- #3: 10% BT/GTC limit order entered
- The $180.00 strike was rolled-down to the $177.50 strike
- This resulted in a net credit of $0.55/share, an additional $110.00 in premium
- This locked in a maximum value of $177.50 by the next day’s contract expiration
Final trade status at expiration on 7/3/2025
- HWM closed at $181.06
- 200 x HWM sold at the rolled-down strike of $177.50
- Loss per-share = $7.90 ($185.40 – $177.50)
- Option credit = $6.52/share ($597 – $0.60 + $1.15)
- Net loss = $1.38/share = $276.00
- Loss w/o options = $868.00 ($4.34 x 200)
- Total option mitigation benefit = $592.00
Discussion
- Significant returns can be generated with 4-day defensive covered call trade
- Option trades can be crafted to align with all market environments and personal risk tolerance
- In the case of HWM, a significant initial 4-day return was captured and ultimately resulted in a minor loss despite a significant share price decline
- Not all trades will be winning ones, but losing ones can be reduced using stock options and position management
Poor Man’s Covered Call Calculator
The PMCC Calculator is designed to determine initial trade structure and status as well as various position management price point considerations the exit strategy price buyback points to buy back the short calls based on the 20%/10% guidelines detailed in the BCI books and Video Programs. Cells will be provided to enter the option month and current date used to assist with the calculations. There are 5 tabs incorporated into this calculator:
Click here for an informational video.
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)
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:
Hello Alan,
1. BCI Educational Webinar #9
Thursday January 15, 2026
8 PM ET – 9:30 PM ET
Watch a video overview of the webinar.
Topic:
Using Conservative Stock Options to Create a 3rd Income Stream in Stock Portfolios
Renting your stocks on a short-term basis
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.
Reserve a seat and register now by clicking here.
2. 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.
3. 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.
4. 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.
5. 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 on capital preservation.
More details to follow.
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 12/05/25.
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
Good Morning Gentlemen,
Working on filling out the TMC for this week.
On December 1st I sold (2) covered call contracts on GOOGL at $320 per share and got $3.50 in premium – expiration 12/5/2025.
The stock finished the day on Friday at $321.27 at market close and was still at $320.54 at the end of the after hours trading session.
Reviewing my account this morning and these options were not exercised. I’ve still got 200 shares in my account.
So basically I picked up an additional $1.27 in value (vs market close) on 200 shares.
I’ve been trading options for a few months and this is the first time this has happened. Usually if the option is ITM it goes.
Is there any logic behind why this wouldn’t have been exercised?
Appreciate your knowledge on this one as it’s an oddball for me.
Andrew
Andrew,
Yes, this is rare, but it’s happened to me a handful of times over the past 30 years.
It’s still possible you may see exercise prior to market open on Monday.
If not, market-makers may have received some news suggesting a lower open on Monday.
Let me know what happens on Monday and thanks for sharing.
Alan
Hi Alan,
Thank you for the reply.
The 200 shares of GOOGL were still in my account Monday morning and I was able to do a new weekly option against those shares.
Based upon the data I’m seeing GOOGL opened at 9:30 with the market open around $320 per share which would have still been slightly in the money against the $320 strike that expired on Friday.
I appreciate you sharing the info that you have seen this happen before even if it’s very rare as I was very perplexed why the option owner would choose not to exercise the option.
Andrew
Alan,
I bought 100 shares of stock and sold a deep in the money 84 Delta call the stock price took off and I was wondering is it worth it to buy the call back close to expiration to keep my stock which I wanna do.
Donald
Don,
If a strategy goal is to retain the underlying shares when a call strike is expiring ITM, then buying back the short call is required. We can also roll the option to a later date.
Using an 84-delta strike, means there is an (approximate) 84% probability that the option will expire ITM and subject to exercise. Therefore, when our trades are initially structured, we must select lower delta strikes, depending on how much risk of exercise we are prepared to take and what our initial time-value return goal range is.
For example, we may select OTM strikes with deltas of 10 or less, accepting initial annualized returns between 4% – 15%.
Alan
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
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https://www.thebluecollarinvestor.com/member/login.php
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Alan and the BCI team