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Portfolio overwriting is a covered call writing-like trading strategy. There are 2 distinctly defined goals: generating cash flow + retention underlying shares. Since deep out-of-the-money (OTM) strikes are used to align with the goal of share retention, our % premium returns are expected to be significantly lower than those of traditional covered call writing.  4% – 15% annualized returns is a reasonable guideline range. When share retention is super-critical, lower annualized returns are appropriate. This does not include share appreciation or dividend income, when applicable.

Despite selecting deep OTM call strikes, there are times when a strike is expiring in-the-money (ITM), and we roll the option to avoid exercise. When the original short call is closed, there is an option debit which impacts the final returns. So, how does that debit impact our decision regarding our strike selection for the later-dated option contracts? Should it have any influence at all on those determinations? This article will analyze a real-life example with NVIDIA Corp. (Nasdaq: NVDA).

NVDA trades from 5/12/2025 – 6/20/2025

• 5/12/2025: Buy 100 x NVDA at $123.00
• 5/12/2025: STO 1 x 6/20/2025 $143.00 call at $1.56
• 6/20/2025: NVDA trading at $143.85, leaving the $143.00 call ITM as the option is approaching expiration at 4 PM ET
• Roll the 6/20/2025 $143.00 call (buy-to-close at $0.88) to the 7/18/2025 $160.00 call (sell-to-open at $0.78). This is known as rolling-out-and-up.

NVDA option-chain on 5/12/2025

• With NVDA trading at $123.00, the 6/20/2025 $143.00 strike has a bid price of $1.56 and a delta of 18% (probability of expiring ITM and subject to exercise)
• This is a reasonable approach to portfolio overwriting. For less risk of exercise, use higher-strike, lower-delta options. When retention of underlying shares is absolutely essential to the strategy goals, deltas ranging from 2% -5% may be more appropriate

Calculations after closing the $143.00 short call on 6/20/2025 (deducting the $0.88 BTC debit from the $1.56 premium) 

• Using the BCI Trade Management Calculator (TMC):
• Prior to selecting the next contract strike, the final option return was 0.55%, 5.04% annualized, successful portfolio overwriting result (brown cells)
• This includes the BTC debit of $0.88
• There is also an unrealized gain of 16.26% of share appreciation (purple cell)
• What is the best strike to select for the 7/18/2025 contracts?

NVDA option-chain on 6/20/2025 for the 7/18/2025 expirations

• We evaluate the risk of exercise by looking at a deep OTM call strike with low Delta
• The 7/18/2025 $160.00 call strike has a Delta (risk factor) of 13% and a bid price of $0.78
• The initial rolled returns are 0.54%, 7.07% annualized
• These are reasonable portfolio overwriting returns with a risk factor of 13%
• If NVDA is trading > $160.00 as expiration approaches, the option can be rolled again

Discussion

When using the strategy of portfolio overwriting, rolling an option plays no role in strike selection for the later-dated contracts. Since share retention is a critical aspect of the strategy, only deep OTM strikes are used based on their associated risk of exercise factors. The more critical share retention is to the strategy, the lower deltas (2% – 5%) should be favored.

Covered call writing is a cash-generating strategy that lowers our cost basis thereby improving our opportunities for successful investments. It involves a long stock position (we buy the stock) and a short option position (we sell the call option). The PMCC strategy replaces the long stock positions with long call positions, typically deep in-the-money long-term expiration options known as LEAPS. Because long options cost less than stocks, we are investing less money and the return on our capital increases. As with all strategies, there are pros and cons that must be mastered to determine if this is a proper strategy for our personal risk-tolerance and return goals.

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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

Registration link to follow.

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.