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Rolling-Out Decisions for Our Covered Call Writing Trades: 3 Strategies Analyzed

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When our covered call writing strikes are expiring in-the-money (with intrinsic-value), our shares will be sold at the strike price. We may opt to retain the shares by rolling the option to a later date. This article will highlight 3 paths we can take and discuss the factors that will guide us to our final decisions.

Hypothetical rolling scenario

  • 9/18/2023: 100 x BCI purchased at $48.00
  • 9/18/2023: STO 1 x 10/20/2023 $50.00 call at $1.50
  • 10/20/2023: BCI trading at $52.00
  • 10/20/2023: If we take no exit strategy intervention, shares will be sold at $50.00 (allowing exercise)
  • 10/20/2023: Cost-to-close the 10/20/2023 $50.00 call is $2.05
  • 10/20/2023: Bid price for the 11/17/2023 $50.00 call is $3.50 (to roll-out)
  • 10/20/2023: Bid price for the 11/17/2023 $55.00 call is $1.95 (to roll-out-and-up)

Factors that determine which path to follow

  • Do we want to retain the shares for the next contract cycle (including no upcoming earnings report)?
  • Will the rolling calculations align with our pre-stated initial time-value return goal range (2% – 4% per-month, as 1 example)?
  • Are we bullish (favor rolling out-and-up) or bearish (rolling-out) on the overall market?

Allowing exercise calculations using the BCI Trade Management Calculator (TMC)

  • Section 1 shows trade entries
  • The Trade Management Calculator (TMC) shows a 33-day trade, if taken through contract expiration (red circle)- section 2
  • The initial time-value return is 3.13%, 34.56% annualized (brown cells)- section 2
  • By “allowing exercise”, shares are sold at $50.00 (red arrow)- section 3
  • Section 4 shows a final realized 33-day return of 7.29%

Rolling-out to the 11/17/2023 $50.00 strike (defensive exit strategy)

  • The net premium is $1.45 ($3.50 – $2.05)- red circle
  • The initial time-value return is 2.90%, 40.71% annualized, based on a 26-day trade (brown cells)
  • There is no upside potential or downside based on a $50.00 price (green cells)
  • Keep in mind, that shares are actually $52.00 at the time of the roll, but only worth $50.00 to us, due to our contractual obligation to sell at $50.00

Rolling-out-and-up to the 11/17/2023 $55.00 strike (aggressive exit strategy)

  • The net premium is -$0.10 ($1.95 – $2.05)- red circle
  • The initial time-value return is -0.20%%, -2.81% annualized, based on a 26-day trade (brown cells)
  • There is 10% upside potential based on a $50.00 price (green cell)
  • Keep in mind, that shares are actually $52.00 at the time of the roll, but only worth $50.00 to us, due to our contractual obligation to sell at $50.00


When our covered call writing strikes are expiring in-the-money, there are several exit strategy paths we can take. This article highlighted allowing exercise, rolling-out and rolling-out-and-up. Mastering and focusing in on the factors discussed will guide us to the appropriate path to take.

There is another way to address rolling calculations, using the TMC, where the BTC debit is incorporated into the first contract cycle. I will address this in a future article.

Covered Call Writing Alternative Strategies

Portfolio Overwriting– using stocks in buy-and-hold portfolios.
The Collar Strategy– using protective puts.
The Poor Man’s Covered Call– using LEAPS options.
Covered call writing is a cash-generating strategy that lowers our cost basis thereby improving our opportunities for successful investments. One of the many benefits of incorporating this strategy into our investment portfolios is that the system can be crafted to meet our trading style, market assessment, portfolio net worth and personal risk tolerance. This book details three such covered call writing-like strategies.

Click here for more information and purchase link.

Alan presenting at the Stock Trader’s Expo/ Money Show at the Paris Hotel in Las Vegas

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 share some of these testimonials in our blog articles. We will never use a last name unless given permission:

Thanks Alan (and Barry) for last night’s session.

I thought it was clear, for what it’s worth.

I have been using the CEO approach since early last year and it’s doing great (except for the 3 weeks I spent in Morocco – should have not set up trades – I know better).

Take care.


Upcoming events

1. Mad Hedge Investor Summit

Tuesday March 12, 2024

11 AM ET – 12 PM ET

Register here for free.

Covered Call Writing Dividend Stocks to Create a 3-Income Strategy

Covered call writing is a low-risk option-selling strategy that generates weekly or monthly cash-flow. By mastering the skill of strike price selection and adding dividend distributions, a potential 3-income strategy can be crafted with a goal of beating the market on a consistent basis.

Topics covered in this webinar include:

  • Strategy analysis
  • Option basics
  • What is covered call writing?
  • Dividend distribution
  • Stock selection
  • Option selection
  • Trade management

Real-life examples will be highlighted with Dow 30 stocks using option-chains and calculation spreadsheets.

Attendees will have the opportunity to participate in written chat box Q&A during the entire webinar.

A deeply discounted comprehensive package of educational products and tools will be offered in the final minutes of the webinar.

Register here for free.

2. Long Island Stock Traders Meetup Group (private investment club- Part II)

Thursday March 14, 2024

7:30 PM ET – 9 PM ET

Club members only

3. BCI-Only Webinar

Thursday April 11, 2024

8 PM ET – 9:30 PM ET

Topic, description and free registration information to follow.

All questions related to covered call writing and cash-secured puts will be answered in real time after the webinar presentation.

4. Stock Traders Expo- live event in Orlando Florida

October 17 -20

Details to follow.

Alan speaking at a Money Show event********************************************************************************************************************

11 Responses to “Rolling-Out Decisions for Our Covered Call Writing Trades: 3 Strategies Analyzed”

  1. Neville March 2, 2024 2:12 am #


    Lets say you have lost say 10 to 15% on a security, which is now trading around $55—purchased at say 63.

    Own 100 shares of the stock.

    Then I sell weekly 1 call ATM or slight OTM.

    Assume stock stays at or above $55 and option premium on an average is 3%.

    In say 3-5 weeks will I break even? Want to use this to recoup any loss on a stock trade.


  2. Alan Ellman March 2, 2024 5:56 am #


    Let’s break this down with some comments you should find useful:

    1. In this hypothetical, share price declined by 12.7%. Could mitigating action have taken place earlier? Probably, yes.

    2. One of our BCI guidelines is to consider selling a security if it declines > 7% from its purchase price, or the price at the time of trade entry. Keep in mind that this is a guideline, not a rule.

    3. If we are still bullish on the underlying security, writing OTM calls is a reasonable approach to mitigation.

    4. Seeking 3% in premium per-week is not reasonable. This annualizes to > 150%.

    5. If we are using ATM or near-the-money (NTM) call strikes, the probability of exercise is about 50%. Consider favoring OTM call strikes with weekly returns of about 0.5% or monthly returns about 2%. This will allow for, both, premium generation + share price recovery. Patience, here, is an important virtue.

    6. Is the cash invested in this declining stock best placed in its current “home” or in a better-performing stock? It’s the cash we care about, not the stock, unless we may be subject to negative capital gains issues, if sold.

    7. We can also turn to our “stock repair strategy”, where our breakeven price points are lowered at little or no cost. Here is a link to one of the articles I published on this topic:


  3. Barry B March 2, 2024 9:51 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 03/01/24.

    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:

    Reminder: Premium Member’s pricing is locked 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

  4. Lindsay March 3, 2024 1:55 am #

    Hi Alan,

    Hope all is well for you and family. I had a question for you.

    Let’s say I hold a share XYZ bought at $100.

    I have a covered call on it, expiring this coming Friday 4pm. The strike is $110.

    If at 4pm on Friday (day of expiration) the price of the stock was $108 but then, in after hours trading, the stock rose to say $120 and I didn’t close my trade.

    What would be the end result in the washup?

    Would I lose my shares for $110?

    Keep well.


    • Alan Ellman March 3, 2024 6:09 am #


      Market-makers have until 5:30 PM ET to decide on exercise.

      If unexpected, good news come out after 4 PM ET, that lifts share price well above the (now) in-the-money strike, exercise and sale of the shares is a likely scenario.

      That said, a stock price moving up > $2.00 per-share after hours is quite unusual, but possible.

      If the stock price is pennies below the strike as expiration approaches, and it is important to us to retain the shares, rolling the call option is reasonable.


      • Lindsay March 3, 2024 6:31 am #

        Thanks Alan, much appreciated.


  5. Richard March 4, 2024 2:16 pm #

    Hi Alan,

    For the first time in over 800 covered call transactions, I had a situation in which a covered call which, at 4:00 pm EST expired 1.75% ITM but was not fully assigned. I was shocked.

    I had PLTR CCs expiring March 1, $24.50 strike. The stock closed at $24.93 but dropped significantly after hours starting at 5:15 pm EST. Only 35% of my shares were assigned. So, now, I have 65% of my shares trading, currently, around $24.

    I never had this situation before. I didn’t realize that the party on the other side who had the long options could opt to not exercise/let lapse their options well into the after hours (up to 5:25 pm EST on Interactive Brokers).

    I can handle the position from here, but I didn’t know this situation was even possible. I thought that at 4:00 p.m. EST if the position was even $0.01 ITM, then it was a done deal…..


    • Alan Ellman March 5, 2024 5:57 am #


      Your original understanding is accurate most of the time.

      After market close on expiration Friday, market-makers (not us) have an additional 90 minutes to decide on exercise.

      If there is a news event that comes out after hours, they may elect not to exercise options that were ITM at 4 PM ET.

      When we establish our trading protocol, we must base it on standard or typical procedures, not on aberrations like you had with PLTR.

      Thanks for sharing.


  6. Phil March 4, 2024 4:17 pm #


    With the market doing so well, I could see buying stocks and ETF’s and not selling options. This is a pure bull strategies.

    Obviously, if it drops, there is no option to buy back.

    is that it? Can anything else be done?

    Enjoying the membership.


    • Alan Ellman March 5, 2024 6:06 am #


      If we are bullish on the market, we can establish our covered call writing trades accordingly.

      Prior to crafting our trades, we must first define our initial time-value return goal range. For me, it’s 2% – 4% per month (1/4 that goal for weekly options).

      Back to our bullish market assumption: We favor deeper out-of-the-money call strikes, resulting closer to the 2% goal, thereby allowing for greater share appreciation from current market value up to the OTM strike.

      Bottom line: We can institute our trades based on current market conditions and re-evaluate our bullish (or bearish) assumptions on a weekly or monthly basis, depending on the expirations we are using.


  7. Alan Ellman March 6, 2024 4:41 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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