Income & Covered Calls
Covered calls, poor man's covered calls, and managing assignment.
Module 1: Covered Call Basics
A covered call means getting paid today for agreeing to sell stock you already own at a price you choose. Here's exactly how it works, with a full worked example.
The strike you choose sets your exit price; the expiration sets how long you're committed to it. Here's the trade-off, worked out across three strikes.
Covered calls are often sold as pure income, but the premium is payment for giving up unlimited upside. Here's what that costs, worked out across three market scenarios.
Module 2: Advanced Structures
A poor man's covered call swaps 100 shares of stock for a long-dated call option, freeing up most of the capital a real covered call requires. Here's exactly how the substitution works.
LEAPS are just options with expirations over a year away — the long-dated call behind every poor man's covered call. Here's what the extra time changes.
Lower capital sounds like a strict upgrade, but the poor man's version trades one set of risks for another. Here's a direct, side-by-side comparison.
Module 3: Managing Positions
Rolling means closing an existing call and opening a new one, usually further out in time or at a different strike. Here's exactly how it works, worked out to avoid assignment.
Sometimes the right move is simply letting assignment happen. Here's what that looks like mechanically, and why many sellers treat it as a fine outcome.
A covered call doesn't have to run to expiration or assignment. Here's why traders buy back a call early, worked out with a real locked-in-profit example.