We write an out-of-the-money (OTM) covered call and share price moves up but does not breach the OTM strike by expiration Friday, so the option expires worthless. What price do we enter on Monday for the next expiration cycle? The original price, the price at expiration or the original price minus the original premium? This article will present a real-life analysis of such a scenario, using Bank of America Corp. (NYSE: BAC) to demonstrate the BCI approach.

Real-life example with BAC

• 12/1/2025: Buy 100 x BAC at $53.20
• 12/1/2025: STO 1 x 12/19/2025 $55.00 call at $0.61
• 12/18/2025: BTC 1 x 12/19/2025 $55.00 call at $0.06 (10% guideline). No opportunities to generate additional premium by rolling-down
• 12/19/2025: BAC trading at $54.11 as the contract expired

Initial calculations for the BAC trade

• The BCI Trade Management Calculator shows a 19-day return of 1.15%, 22.03% annualized
• There is an opportunity of an additional upside potential of 3.38%, if BAC moves up to, or beyond the $55.00 strike

Post-adjusted calculations for the BAC trade

• There was share appreciation (unrealized, because shares are not yet sold) to $54.11 (from $53.20)
• The final realized option return was 1.03%
• The unrealized share return was 1.71%
• The final realized/unrealized net return for the 19-day period was 2.74%, 52.64% annualized

What cost-basis should we enter for the next contract cycle?

Since the shares are owned at $54.11 prior to market open, and the previous option profits were calculated for the last contract cycle, we will start with this price for the next cycle. If we didn’t write an option and just calculated share appreciation, we would use $54.11 because previous option and share appreciation were booked for the previous cycle. I do not like using the option profit twice, once to calculate returns and the other to lower cost-basis. I understand that other experts may have a different philosophical approach to the mathematics, but I’m happy to share the how and why of the BCI technique.

Discussion

When an OTM covered call expires worthless on expiration Friday, we use the closing price of the stock when entering our next trade on Monday. One final thought: If we don’t enter another call trade on Monday and wait an extended period of time to do so, use the current market value of the stock at the time of the trade.

Stock Investing for Students: A Plan to Get Rich Slowly and Retire Young

(Educating our youth to financial independence) – 12-Part VIDEO Series + 2 Companion PDF BOOKS

Self-investing starting at a young age can ensure a successful financial future and an early and comfortable retirement. So why is nobody doing this and taking advantage of the power of compounding? Change your thinking. Create a goal. Utilize the rich BCI methodology to facilitate your plan. Financial independence is achievable. Start today!

Click here for more information.

Free training resources

Click here.

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. Mad Hedge Investor Summit

June 3, 2026

12 PM ET – 1 PM ET

Covered Call Writing

Uncovering a 3^rd 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 3^rd 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 3^rd 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.

Details & registration link.

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.

Large cash premiums can attract us into making trades that are not in our best interest. We must be able to calculate the returns over both short and longer timeframes, as well as measure the risk inherent in our trades. In this podcast, a $6,000.00 premium was tempting, but once analyzed, painted a completely different picture. A real-life example with INTC was used to detail these points.

Free Resources:
https://thebluecollarinvestor.com/minimembership/bci-free-resources/

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⁠https://thebluecollarinvestor.com/minimembership/premium-membership/

Best Discounted Packages:

1. BCI Package, our Best and most Comprehensive Investment package:
⁠https://thebluecollarinvestor.com/minimembership/bci-investor-program/

2. TCM Package – BCI Trade Management System:
⁠https://thebluecollarinvestor.com/minimembership/bci-trade-management-system/

3. CEO Package – Includes TMC Package:
⁠https://thebluecollarinvestor.com/minimembership/ceo-package/

4. Credit Spread Management System
https://www.thebluecollarinvestor.com/the-bci-credit-spread-management-system/

]]> https://www.thebluecollarinvestor.com/bci-podcast-172-large-returns-can-be-enticing-we-must-do-the-math-to-make-sensible-trades/feed/ 0 https://www.thebluecollarinvestor.com/using-options-to-convert-a-9-5-annualized-los-to-a-25-3-annualized-gain/ https://www.thebluecollarinvestor.com/using-options-to-convert-a-9-5-annualized-los-to-a-25-3-annualized-gain/#comments Sat, 16 May 2026 08:01:38 +0000 https://www.thebluecollarinvestor.com/?p=213532

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

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

Learn more here.

Free training resources

Click here.

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. Mad Hedge Investor Summit

June 3, 2026

12 PM ET – 1 PM ET

Covered Call Writing

Uncovering a 3^rd 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 3^rd 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 3^rd 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.

Details & registration link.

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.

Hi Alan & Barry,

Please see the attached sequence of trades I executed with HWM. My question is as follows: In recording the trade into the TMC, I was able to successfully input the original trade and the subsequent roll-out/down adjustment. However, where do I record the third and final transaction, that is the $4 BTC transaction? Unless I’m missing something, the TMC does not appear to have a column(s) for that. So, how do I record that final transaction so that the amounts in the “Combined Final Trade Profit/Loss” columns are fully accurate? I calculate a net credit of $294.00.

Thanks,
John

Free Resources:
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Best Discounted Packages:

1. BCI Package, our Best and most Comprehensive Investment package:
⁠https://thebluecollarinvestor.com/minimembership/bci-investor-program/

2. TCM Package – BCI Trade Management System:
⁠https://thebluecollarinvestor.com/minimembership/bci-trade-management-system/

3. CEO Package – Includes TMC Package:
⁠https://thebluecollarinvestor.com/minimembership/ceo-package/

4. Credit Spread Management System
https://www.thebluecollarinvestor.com/the-bci-credit-spread-management-system/

More Videos:

• For those new to Alan’s system of Covered Call Writing, be sure to take the Free Beginners Corner Series
• Free Training Videos Archive
• Ask Alan Video Q & A Archive
• Subscribe to our YouTube Channel

To enter your questions to “Ask Alan”, fill out the form on the contact page. Be sure to begin your message with “ASK ALAN”

In previous publications, laddering covered call strikes with the same expiration dates was discussed. This article will address scenarios when the ITM strikes remain ITM and the OTM strikes remain OTM at expiration. A real-life example with Alamos Gold Inc. (NYSE: AGI) will be analyzed.

AGI 5-day trade

• 12/15/2025: Buy 400 x AGI at $38.08
• 12/15/2025: STO 1 x $40.00 OTM call at $0.20
• 12/15/2025: STO 3 x $37.00 ITM calls at $1.45
• Pre-stated initial weekly time-value return goal range is 1/2% to 1% for both ITM & OTM strikes

Initial Covered Call Trade Calculations: BCI Trade Management Calculator (TMC)

• Red oval: 5-day trade
• Yellow field: Breakeven price points
• Brown cells: Initial time-value returns for the OTM $40.00 strike
• Purple cell: Additional upside potential for the OTM call strike (potential 2nd income stream from share appreciation)
• Pink cells: Initial time-value returns for the ITM $37.00 strike
• Blue cell: Downside protection of the ITM time-value return

Trade status after Expiration on 12/19/2025

• AGI closed at $38.48
• This is $0.40 above the price at trade entry
• I allowed the 300 shares to be exercised at $37.00 for a net gain of $111.00
• I am holding 100 shares at an unrealized gain of $40.00 and an option realized gain of $20.00
• Total 5-day realized + unrealized gain = $171.00 = 82% annualized

Discussion

Just as we have the opportunity to use different strikes for the same underlying security with the same expiration dates, we also have the flexibility to allow or prevent exercise and assignment of our shares. I could have bought back and rolled the ITM strike prior to expiration but decided to allow exercise and retain the remaining 100 shares to then write a covered call the following week. In essence, I had 4 successful contract trades and took some money off the table for the next contract cycle.

Stock Repair Calculator

What is the stock repair strategy?

• Own shares at a price higher than current market value (unrealized loss)
• Willing to forego potential profit in exchange for lowering the breakeven price point
• Not willing to add additional funds to the current losing position
• Instead of buying shares at the lower price to “average down”, an at-the-money (near-the-money) call option is purchased and funded by selling 2 out-of-the-money call options
• 2 long positions (stock and ATM or NTM call)
• 2 short positions (OTM calls covered by long positions)
• This action will lower the breakeven price point
• The strategy does not protect against additional downside loss
• The strategy does cap the upside

Click here for more.

Free training resources

Click here.

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. BCI Educational Webinar #10: The Put-Call-Put (PCP) or “Wheel Strategy”

Thursday May 14, 2026, at 8 PM ET (LAST CHANCE TO REGISTER)

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).

2. Mad Hedge Investor Summit

June 3, 2026

12 PM ET – 1 PM ET

Covered Call Writing

Uncovering a 3^rd 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 3^rd 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 3^rd 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.

Details & registration link.

3. American Association of Individual Investors: NYC Chapter

Date and time to be confirmed.

Via Zoom.

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.

One of our frequently used covered call writing exit strategies is rolling-out, where we buy back the current short call and sell a later-dated short call. This podcast uses a real-life example with NVDA where multiple rolling trades were executed, both rolling-out and rolling-out-and-up.

Calculations are shown using the BCI Trade Management Calculator and final 50-day trade results are calculated.

Free Resources:
https://thebluecollarinvestor.com/minimembership/bci-free-resources/

Premium Membership:
⁠https://thebluecollarinvestor.com/minimembership/premium-membership/

Best Discounted Packages:

1. BCI Package, our Best and most Comprehensive Investment package:
⁠https://thebluecollarinvestor.com/minimembership/bci-investor-program/

2. TCM Package – BCI Trade Management System:
⁠https://thebluecollarinvestor.com/minimembership/bci-trade-management-system/

3. CEO Package – Includes TMC Package:
⁠https://thebluecollarinvestor.com/minimembership/ceo-package/

4. Credit Spread Management System
https://www.thebluecollarinvestor.com/the-bci-credit-spread-management-system/

]]> https://www.thebluecollarinvestor.com/bci-podcast-171-rolling-out-to-impressive-profits/feed/ 0 https://www.thebluecollarinvestor.com/laddering-covered-call-strikes-based-on-market-assessment-and-risk-tolerance/ https://www.thebluecollarinvestor.com/laddering-covered-call-strikes-based-on-market-assessment-and-risk-tolerance/#comments Sat, 02 May 2026 09:17:32 +0000 https://www.thebluecollarinvestor.com/?p=213504

What strike should I select for my covered call trades? In-the-money (ITM), out-of-the-money (OTM), how far out, how far in? This apparent dilemma can easily be navigated by identifying our return goals, market assessment and personal risk tolerance. Another important factor is that, when selling multiple contracts, we can use different strikes, a process I refer to as laddering strikes. I borrowed this term from the bond market.

A Real-Life Example with Kinross Gold Corp. (NYSE: KGC) on 12/29/2025 (5-day, holiday-shortened trade)

• 12/29/2025: Buy 1000 x KGC at $27.60
• 12/29/2025: STO 8 x 1/2/2026 $27.00 (TM) calls at $0.92
• 12/29/2025: STO 2 x 1/2/2026 $28.50 (OTM) calls at $0.25

What are these strike selections telling us?

Of the 10 contracts sold, 8 were ITM, a defensive approach; 2 were OTM, a more aggressive approach. Overall, I was leaning defensively, with a cautious overall market assessment, which aligned with my personal risk tolerance at the time of these trades.

What about option premium return goals?

I, typically, target 2% – 4% per month and 1/2% – 1% per week. In these trades, I was at the high end of these ranges.

Initial Covered Call Trade Calculations: BCI Trade Management Calculator (TMC)

• Brown cells: The ITM strikes generated initial returns of 1.19%, 86.52%, with 2.17% downside protection of that time-value profit (purple cell)
• Pink cells: The OTM strike generated 0.91%, 66.12% annualized, with 3.26% of upside potential (blue cell)
• Green cells: A total of $306.00 in time-value premium was generated into my brokerage account

Post expiration results

• KGC closed at $28.30, leaving the $27.00 call expiring ITM and 800 shares were sold at $27.00
• The $28.50 strike expired slightly OTM, so 200 shares were retained
• The initial cash outlay for 1000 shares was $27,600.00
• The realized loss on the sales of 800 shares (ITM strike) was $480.00
• The unrealized gain on 200 shares is $140.00
• Net return on the stock side: -$340.00
• Net realized option premiums: $736.00 + $50.00 = $786.00
• Net realized/unrealized return is +$446.00 = 1.61%, 84% annualized (52 periods)

Discussion

• Significant returns can be generated with 5-day covered call trades even during holiday-shortened weeks
• Option trades can be crafted to align with all market environments and personal risk tolerance
• In the case of KGC, significant 5-day returns were initially captured and realized
• These are low risk, not no risk trades

THE POOR MAN’S COVERED CALL

Online Streaming video course with Downloadable Workbook

This program will highlight in great detail:

• PMCC definition
• Pros and Cons
• Risk/reward profile
• Best stocks and ETFs to consider
• How to construct a PMCC trade
• Hypothetical example
• Multiple real-life examples
• The BCI PMCC Calculator
• Option Greeks
• Position management
• Rolling LEAPS

Click here for a video & more.

Free training resources

Click here.

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. 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).

2. Mad Hedge Investor Summit

June 3, 2026

12 PM ET – 1 PM ET

Covered Call Writing

Uncovering a 3^rd 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 3^rd 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 3^rd 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.

Details & registration link.

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.