Covered call writing & selling cash-secured puts lower our cost-basis and generate cash flow. These are low-risk (not no-risk) option selling strategies. In this article, a 12-day real-life (from 1 of my portfolios) series of trades will be analyzed with NVIDIA Corp. (Nasdaq: NVDA), where share price declined slightly, but a nice 12-day return was realized, by implementing covered call writing.
Real-life covered call trades with NVDA
- 1/5/2026: 200 x NVDA purchased at $186.68
- 1/5/2026: STO 2 x 1/16/2026 $195.00 calls at $1.99/share ($398.00 total)
- 1/5/2026: Enter BTC/GTC limit order at $0.20 (10% guideline to protect against share price decline)
- 1/14/2026: The 10% threshold was breached, and the option was rolled down to the $188.00 strike, netting an additional $28.00 in premium
- 1/16/2026 (expiration Friday): NVDA closed at $186.10, leaving the $188.00 strike expiring OTM and expiring worthless (no exercise)
NVDA initial calculations with the BCI Trade Management Calculator (TMC)
- Brown cells: 1.07%, 12-day return, 32.42% annualized
- Purple cell: 4.46% upside potential, if NVDA moves up to, or beyond the $195.00 strike
- Pink cell: $398.00 in premium collected
Rolling-down after breach of 10% guideline (broker confirmation)
Trade Status as of 1/16/2026 After 4 PM ET
- NVDA closed at $186.10, down $0.58 from trade inception (unrealized loss of $116.00)
- The $188.00 strike expires worthless and OTM
- Total option credit: $398.00 + $28.00 = $426.00
- Unrealized share loss: $116.00
- Net realized/unrealized credit = $310.00 ($426.00 – $116.00)
- 12-day return: $310.00/$37,336.00 = 25.3% annualized
- Without options, an annualized loss of 9.5%
Discussion
- Significant initial returns can be generated with 12-day covered call trades
- Option trades can be crafted to align with all market environments and personal risk tolerance
- In the case of NVDA, a significant 12-day unrealized (shares not sold) return was generated despite share value declining
- These are low-risk, not no-risk trades
Combining Exchange-Traded Funds with Stock Options
This book Is written for investors seeking a low-risk approach to generating cash flow in a user-friendly and time efficient manner. It utilizes covered call writing and then tailors the strategy to achieve the following goals:
- Sell options to lower our cost-basis
- Generate weekly or monthly cash flow with reduced but still significant initial percent returns
- Reduce the database of underlying securities available from 8500 to 11
- Reduce the number of exit strategy considerations from 14 to 4
- Beat the market on a consistent basis
- Reduce portfolio volatility
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:
New Quasar markets interview:
1. 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.
2. American Association of Individual Investors: NYC Chapter
Date and time to be confirmed.
Via Zoom.
More information to come.
3. MoneyShow Masters Symposium Las Vegas
July 20 – 22, 2026
Caesars Palace Hotel
Las Vegas
Details to follow.
4. Toronto Money Show
September 24 – 25, 2026
MaRS Center, Toronto Canada
5. Orlando Money Show
October 5 – 7, 2026
Hilton Orlando Lake Buena Vista
Details to follow.
6. Triple Edge Investing Summit: Technical Analysis • Options Strategies • ETF Mastery
Saturday January 23, 2027
Zoom presentation
Paid event
All-day event hosted by 3 experts:
- Dr. Alan Ellman (options)
- Dr. Eric Wish (technical analysis)
- Les Masonson (ETFs)
Hosted by TraderLion University
Details to follow.
