Covered call writing portfolios are structured based on cash available, the # of securities used to maximize diversification, as well as appropriate cash allocation and initial time-value return range goals. In this article, 5 exchange traded funds (ETFs) were selected to diversify a $50k portfolio for covered calls.
ETF selection (from the BCI ETF Report published on 12/1/2025): Diversification
- SLV (Silver)
- GDX (Gold)
- ARKG (Tech/ Health care)
- COPX (Copper)
- TAN (Solar)
Portfolio Setup (from the BCI Portfolio Setup Spreadsheet): Final Diversification & Cash Allocation
- The initial setup left a large cash balance, so an additional 100 shares was added to the TAN position for a final total of 300 shares
- There is a cash reserve of $920.00 for potential exit strategy opportunities (+ option premium income)
Initial per- trade 12-day calculations using the BCI Trade Management Calculator (TMC): Initial time-value returns
- Red oval: These are 12-day trades
- Yellow cells: Breakeven price points
- Brown cells: Initial 12-day returns + annualized returns
- Purple cells: Additional upside potential from current market value up to the out-of-the-money strikes
Initial total portfolio calculations using the BCI Trade Management Calculator (TMC): Initial time-value returns
- 10 contracts sold
- $924.00 cash generated (1.88%)
- Upside potential: $1820.00
- Max 12-day return (w/o exit strategies): $2744.00 (5.59%)
- Flat 12-day return: 1.88%, 57.18% annualized
Discussion
When crafting our option portfolios, stock selection, option selection, diversification, cash allocation and initial time-value returns must all be considered. By doing so, our portfolios will be protected and our opportunities to generate the highest possible returns will increase exponentially.
Covered Call Writing Alternative Strategies: Softcover
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 that will highlight:
- Portfolio Overwriting- using stocks in buy-and-hold portfolios
The Collar Strategy- using protective puts
The Poor Man’s Covered Call- using LEAPS options
Free training resources
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:
Hi Alan,
I am sure I speak for many others in BCI community, when I say, “Please don’t ever retire “. I have always done well, but BCI methodology and tools have increased my trade success rate and my knowledge of the market.
Thanks so much,
John
1. Sarasota Investment Group
Portfolio Overwriting: A Form of Covered Call Writing
Wednesday April 22, 2026
Details to follow.
2. BCI Educational Webinar #10: The Put-Call-Put (PCP) or “Wheel Strategy”
Thursday May 14, 2026, at 8 PM ET
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).
3. American Association of Individual Investors: NYC Chapter
June 10, 2026, at 6 PM – 8 PM ET
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.
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 04/10/26.
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
Hi Alan,
The Blue Collar rules suggest a minimum open interest of 100 before entering a trade.
My question is about long term call options. If the open interest for a 9 month call option is 2 at the time of trade, is it ok to enter the trade thinking that the open interest will increase during the option period?
I know there is uncertainty, but I would like your thoughts.
Alan B.
Alan,
I’ll give a general response but will need to know the specific strategy you are using and why you are using LEAPS to render a more precise response.
In addition to looking at the # of open interest contracts, have a look at the bid-ask spreads. Think in terms of buying back the option, which may become necessary and see if the spread makes sense.
Send me your strategy specifics and I can give a more complete response.
Alan
I read an article about option traders taking advantage of high volatility stocks looking for high premiums for time decay.
An example was stock “NTES” selling the 1/15/27 call with a strike of $40.00 and a premium of $75.00/share.
The article said that the traders must know something big was going to happen.
I looked at the option listed and it only had an open interest of 2.
I wondered if entering that trade was safe if in the nine months until exercise there would be additional open interest to buy to close.
Your opinion?
Alan,
WOW, where do I start with this one?
First, kudos to you for your awareness of the importance of option liquidity. In this trade, there are bigger fish to fry.
A $75.00 per-share premium is certainly enticing until we break it down into its 2 components: intrinsic value ($74.35, not profit because we are devaluing our shares by that amount) + time value ($0.65, the actual initial profit).
Since this is a 277-day trade, we must annualize the return and compare to other investment choices.
So, annualized returns is an important metric to evaluate before entering a trade like this (see the screenshot below).
Another consideration is that there are 3 earnings reports the trade takes us through, all risky events. Now, it is unlikely that NTES will move lower than $40.00 in 9 months, but if the shares get hammered 3x by 3 disappointing ERs, it’s possible. If this unlikely event does occur, this is where the low option liquidity and large bid-ask spread comes into play.
I created a screenshot using the BCI Trade Management Calculator (TMC) to demonstrate the initial returns. Does a 2.14% annualized return sound exciting?
I would not consider this trade for my portfolios.
CLICK ON IMAGE TO ENLARGE & USE THE BACK ARROW TO RETURN TO BLOG.
Alan
Premium Members:
1. This week’s ETF Report has been uploaded to your member site. Login to the member site and scroll down on the left side to access the report.
ETF Report Video Link:
Explanation of the report format:
https://youtu.be/addf7Y54ixwput
2. A new Blue Chip (Dow 30) Report for the May-2026 contracts has been uploaded to your member site (right side, scroll down to “B”)
3. I’ve attached to premium member emails a 2-contract, 5-day cash-secured put trade, using TTMI as the underlying stock. I executed these trades on 4/13/2016, for the 4/17/2026 expirations.
These contracts were defensive (deep OTM). Significant initial returns and downside protection were generated at the onset of the trades. This is an example of the type of defensive trading I have been favoring. TTMI closed on Tuesday at $120.74 today, down $0.62 from trade entry. The current price is $10.74 above the put strike and $11.65 above breakeven, still plenty of downside protection. As always, I remain prepared to execute exit strategies, if those opportunities arise.
3. Our loyalty pledge to you: Premium members will NEVER experience a rate hike as long as premium member subscriptions remains active … NEVER.
4. Video on covered call ETFs:
https://youtu.be/MPXdeI2x9rY
5. Register now for our free BCI webinar on the PCP (Wheel) Strategy on May 14, 2026 (via Zoom):
https://www.thebluecollarinvestor.com/event/bci-educational-webinar-10/
Wishing you the best results,
Alan & the BCI team
Alan,
Thanks for sharing your recent trades. It is very helpful to see trade choices you are making in the current market climate.
When we look at historical trades we don’t get this perspective.
I am looking forward to seeing how you managed the EQT trade from 3/26/2026. I have had a few go like this and will learn a lot from how you managed it.
I’m currently selling weekly CSPs with 10 deltas.
It is working well even though the returns are small.
But, the market reacts to every tweet or news story lately and I didn’t want to be exposed over weekends.
Thanks,
William
William,
I’m happy to share these trades with our premium members.
In March, shares were “put” to me at a breakeven price of $58.75. Today, EQT is trading at $56.62.
I’ve been writing covered calls on these shares which brings me to an overall net positive.
Alan