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Why At-The-Money Calls are Frequently Priced Higher than At-The-Money Puts

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Intuitively, at-the-money (ATM) calls and puts should be priced the same. In most instances, this is not the case. ATM calls are generally priced higher than ATM puts. Why? The reason would center around the cost of carry. The buyer of a call can keep cash in their account, instead of purchasing the shares and earn interest on that cash; while the put buyer foregoes the opportunity to receive cash benefit of a similar amount. We would expect the difference in price between the ATM call and put to closely resemble the cost of carry of the strike price, which relates to the current short-term interest rate. In this article, we will investigate this with Apple Computer (Nasdaq: AAPL), an options calculator – using a 0% interest rate then start moving the rate higher and observing how the call and put prices change. We are making the assumptions of no dividend or hard to borrow scenarios (stocks that are hard to borrow for short sale transactions).

What is Rho?

Although not considered a major Greek, Rho measures the change in the option price due to a change in interest rates.

AAPL: $185.00 ATM call strike: 0% interest (red arrow top)

AAPL: $185.00 ATM put strike: 0% interest (red arrow top)

The theoretical option price for the $185.00 call is $5.137 per share (exact price as the call option). We inserted the ATM implied volatility stat of 23% (as with the call).

AAPL: $185.00 ATM call and put strikes: 1% interest

With interest rate now a factor, we would expect the cost of carry to enhance call value when compared to put value. In the screenshot above, we see call value at $5.095 per-share, compared to put value at $4.942 per-share. Let’s increase the hypothetical interest rate by 100 basis points to 2%.

AAPL: $185.00 ATM call and put strikes: 2% interest

In the screenshot above, we see call value at $5.175 per-share, compared to put value at $4.872 per-share. The difference between call and put value increased as the interest rate increased, accounting for the disparity between ATM call and put strike premiums.


Interest rates (Rho) play a minor role in option prices, but is a factor, nonetheless. This relates to the cost of carry benefit inherent in buying call options which is not implicit with put options. Exceptions can occur due to the existence of dividends or a hard to borrow situation on the shares.

Exit Strategies for Covered Call Writing and Selling Cash-Secured Puts

This book contains 27 chapters of exit strategy information associated with covered call writing and selling cash-secured puts. My goal when authoring this book was to create the most extensive publication ever published on position management for these strategies.

For more information and to order, click here.

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Upcoming events

1. Mad Hedge Stock Investor Summit (online event)

June 4, 2024

11 AM ET – 12 PM ET

Covered Call Writing: Multiple Applications Based on Current

Market Conditions

Real-life examples with Invesco QQQ Trust (Nasdaq: QQQ)

Covered call writing is a low-risk option-selling strategy geared to generating cash flow with capital preservation a key requirement. This presentation will demonstrate how the strategy can be crafted to benefit in all market environments. Market situations highlighted are:

  • Normal to bull markets
  • Bear and volatile markets
  • Low interest-rate environments

A popular large-cap technology exchange-traded fund, Invesco QQQ Trust, will be used to establish rules and guidelines to benefit in these market circumstances.

Registration link to follow.

2. BCI-Only Webinar (Zoom)

July 18, 2024

Exit Strategy Choices After Exercise of Cash-Secured Puts

When we sell cash-secured puts, we are undertaking the contractual obligation to buy shares at the strike price by the expiration date. Typically, we only sell puts on elite-performers that we would be agreeable to own in our portfolio.

This presentation will analyze 4 potential exit strategy opportunities to consider should the put option be exercised. Information on the following strategies will be highlighted:

  • Selling the stock
  • Holding the stock in our long-term buy-and-hold portfolio
  • Write a covered call (PCP or “wheel” strategy)
  • Implement the Stock Repair Strategy

In addition to these strategies, the following topics will also be included in the webinar:

  • Option basics for selling cash-secured puts
  • Option basics for covered call writing
  • Real-life examples
  • Calculations using the BCI Trade Management Calculator (TMC)
  • Event super discount offer

There will be information offered to all levels of options trades, from beginners to advanced.

Registration link to follow.

3. Investment Masters Symposium (live, in person event)

August 1, 2024

Presentation #1: 8:45 AM – 10:45 AM

Paris Hotel, Las Vegas

Covered Call Writing & Selling Cash-Secured Puts to Generate Consistent Cash Flow

Basic & advanced principles for trading low-risk stock options with capital preservation in mind

This presentation will detail stock selection, option selection and position management, the 3 required skills to become elite covered call writers and put sellers. It will also include ultra-conservative approaches to these strategies using Delta and implied volatility to create statistically beneficial trades. Rules and guidelines will be discussed to take the emotions out of our trades resulting in high-probability positive outcomes.

Detailed analysis will be provided regarding how to craft our trades to the current market environment, personal risk-tolerance and strategy return goals.

A multi-tiered option-selling strategy which combines both covered call writing and selling cash-secured puts will also be examined. It is known as the PCP (put-call-put) or “wheel strategy.”

Attendees will be introduced to a one-of-a-kind trade management tool, the Trade Management Calculator, which is used to enter, manage and generate final realized and unrealized trade results.

The course is structured to benefit both beginner and advanced option traders, using real-life examples to enhance the learning process.

Presentation #2: All Stars of Option Trading Event

Registration details to follow.

4. Stock Traders Expo- live event in Orlando Florida

October 17 -20

Details to follow.

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

4 Responses to “Why At-The-Money Calls are Frequently Priced Higher than At-The-Money Puts”

  1. Marty May 18, 2024 4:01 am #


    Do you favor selling covered calls or cs puts for a newbie?

    Thank you.


  2. Alan Ellman May 18, 2024 7:17 am #


    Covered call writing, definitely.

    However, once the 3 required skills are mastered and you develop confidence with these low-risk strategies, selling cash-secured puts can be incorporated into your portfolios.

    I have multiple option portfolios, calls and puts, weekly and monthly expirations. I slightly favor monthly covered calls, but I use all these approaches.

    I dedicate a separate Trade Management Calculator (TMC) spreadsheet to each portfolio.

    Bottom line: Investors new to options should start with covered call writing, in my humble opinion.


  3. Barry B May 18, 2024 9:55 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 05/17/24.

    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 you will never see a rate increase as long as the membership remains active.

    The Weekly Stock Report for Friday, June 7th will be published on Monday, June 10th.

    Barry and The Blue Collar Investor Team

  4. Alan Ellman May 21, 2024 4:52 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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