The collar strategy is a covered call writing-like strategy where a protective put is added to the covered call trade. Typically, an OTM call represents a ceiling to the trade (maximum gain) and an OTM put represents a floor (maximum loss). In this article, Invesco QQQ Trust (Nasdaq: QQQ), a technology exchange-traded fund (ETF) will be analyzed to explain how the collar strategy can be implemented.

Graphic representation of a collar trade

What is QQQ?

This is an ETF consisting of the top 100 non-financial corporations listed on the Nasdaq exchange. It includes companies like NVDA, AAPL, MSFT and AMZN.

Option chain data for QQQ on 12/8/2025

• QQQ trading at $623.90
• The $626.00 1/9/2026 call strike showed a bid price of $13.27 (ceiling)
• The $618.00 1/9/2026 put strike showed an ask price of $10.75 (floor)
• The goal is to have a net option credit, which is the case using these 2 strikes

Covered call calculations without the protective put using the BCI Trade Management Calculator (TMC)

• Red circle: 33-day trade through expiration
• Brown cells: Initial return: 2.13%, 23.53% annualized
• Purple cell: 0.34% additional upside potential (if QQQ moves up to, or beyond the $626.00 strike)

Covered call calculations with the protective put using net option credit ($13.27 – $10.75 = $2.52

• Red circle: 33-day trade through expiration
• Brown cells: Initial return: 0.40%, 4.47% annualized (without upside potential)
• Purple cell: 0.34% additional upside potential
• The annualized return with upside potential is 8.2%

Discussion

Technology collar trades can be implemented by using QQQ and net option credits. The advantage is that we are eliminating catastrophic losses by including the protective puts. The disadvantage is that we are generating lower initial time-value returns, but with the same upside potential. To generate a higher collar return, a lower OTM call or OTM put strike will accomplish that goal.

Selling Cash-Secured Puts Basic and Advanced Principles

 video course with downloadable workbook

This course contains 6- parts:

Section I: Option basics (definitions and foundational information)
Section II: Traditional put-selling (stock & option selection + position management)
Section III: PCP (wheel) strategy (adding covered calls to selling cash-secured puts)
Section IV: Buy a stock at a discount instead of a limit order (buy a stock at our target price or get paid not to buy the stock)
Section V: Ultra-low-risk put/Delta strategy (High probability, low-risk trades)
Section VI: Ultra-low-risk put/implied volatility strategy (High probability, low-risk trades)

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. Sarasota Investment Group

Portfolio Overwriting: A Form of Covered Call Writing

Wednesday April 22, 2026

Details to follow.

2. 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).

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.

Hi Alan,

I bought NEM at $98.68 and sold the $100 call and now it is trading at $113.70. I can’t make any more money. I’m not sure if I should close the trade or let the shares be sold. I don’t care about losing the stock. Any guidance is appreciated.

Thanks,

Barry

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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”

Covered call writing portfolios are structured based on cash available, the # of securities used to maximize diversification, as well as appropriate cash allocation and initial time-value return range goals. In this article, 5 exchange traded funds (ETFs) were selected to diversify a $50k portfolio for covered calls.

ETF selection (from the BCI ETF Report published on 12/1/2025): Diversification

• SLV (Silver)
• GDX (Gold)
• ARKG (Tech/ Health care)
• COPX (Copper)
• TAN (Solar)

Portfolio Setup (from the BCI Portfolio Setup Spreadsheet): Final Diversification & Cash Allocation

• The initial setup left a large cash balance, so an additional 100 shares was added to the TAN position for a final total of 300 shares
• There is a cash reserve of $920.00 for potential exit strategy opportunities (+ option premium income)

Initial per- trade 12-day calculations using the BCI Trade Management Calculator (TMC):  Initial time-value returns

• Red oval: These are 12-day trades
• Yellow cells: Breakeven price points
• Brown cells: Initial 12-day returns + annualized returns
• Purple cells: Additional upside potential from current market value up to the out-of-the-money strikes

Initial total portfolio calculations using the BCI Trade Management Calculator (TMC):  Initial time-value returns

• 10 contracts sold
• $924.00 cash generated (1.88%)
• Upside potential: $1820.00
• Max 12-day return (w/o exit strategies): $2744.00 (5.59%)
• Flat 12-day return: 1.88%, 57.18% annualized

Discussion

When crafting our option portfolios, stock selection, option selection, diversification, cash allocation and initial time-value returns must all be considered. By doing so, our portfolios will be protected and our opportunities to generate the highest possible returns will increase exponentially.

Covered Call Writing Alternative Strategies: Softcover

Covered call writing is a cash-generating strategy that lowers our cost basis thereby improving our opportunities for successful investments. One of the many benefits of incorporating this strategy into our investment portfolios is that the system can be crafted to meet our trading style, market assessment, portfolio net worth and personal risk tolerance. This book details three such covered call writing-like strategies that will highlight:

• Portfolio Overwriting- using stocks in buy-and-hold portfolios
  The Collar Strategy- using protective puts
  The Poor Man’s Covered Call- using LEAPS options

Click here to learn 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. Sarasota Investment Group

Portfolio Overwriting: A Form of Covered Call Writing

Wednesday April 22, 2026

Details to follow.

2. 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).

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.

When share price moves up exponentially after entering a covered call trade, there are 4 exit strategies to consider:

1: Rolling-up
2: Rolling-out or out-and-up
3: Closing both legs of the covered call trade and entering a new one with a new stock (Mid-contract unwind or MCU exit strategy)
4: Taking no action

Focus will be on the MCU exit strategy.

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-169-exit-strategy-considerations-when-a-call-strike-moves-deep-itm-early-in-a-contract/feed/ 0 https://www.thebluecollarinvestor.com/using-2-standard-deviations-to-determine-the-risk-of-exercise-of-a-high-implied-volatility-stock-when-covered-call-writing/ https://www.thebluecollarinvestor.com/using-2-standard-deviations-to-determine-the-risk-of-exercise-of-a-high-implied-volatility-stock-when-covered-call-writing/#comments Sat, 04 Apr 2026 11:02:02 +0000 https://www.thebluecollarinvestor.com/?p=213425

Portfolio overwriting (PO) is a form of covered call writing where, in addition to generating cash flow, we also want to retain the underlying shares. Achieving both goals may become more challenging when employing high implied volatility (IV) securities. In this article, a real-life example with Intel Corp. (Nasdaq: INTC) will be used to analyze such a scenario.

Real-life example with INTC on 11/12/2025

• INTC trading at $37.85
• The near-the-money $38.00 strike shows an IV of 52%
• IV stats are based on 1-standard deviation (1-SD) and 1-year timeframes which need to be converted to the timeframe for the contract in question
• The BCI Expected Price Movement Calculator will do just that
• The BCI Expected Price Movement Calculator will be used to determine an out-of-the-money strike which has a16% risk of being breached (subject to expiring in-the-money and at risk of being exercised or sold)
• We will double the expected price movement to then calculate the 2-SD amount which will provide a strike with only an approximate 2.5% probability of being breached

INTC option chain on 11/12/2025 showing an ATM IV of 52%

BCI Expected Price Movement Calculator to Select PO Strikes Based on 1 Standard Deviation/ 16% risk factor

• If a 16% risk factor is acceptable, share price is expected to move up or down by $6.35, resulting in a strike selection of $44.00.
• A 2 SD strike is calculated by doubling $6.35 to $12.70, leading to a strike of $50.00 ($37.85 + $12.70)

Standard Deviation Bell Curve showing risk factors of 16% (1 SD) and 2.5% (2 SDs)

• 1 SD risk: Green + brown fields on the high end
• 2 SD risk: Brown field only on the high end

Cash flow using this 2 SD approach with this high IV stock

• The $50.00 strike had a premium of $0.46 for the 12/19/2025, 38-day trade.
• This resulted in an initial time-value return of 1.22%, 11.67% annualized.
• Since the $50.00 strike was so deep OTM, an additional 32.10% of upside potential was also available.

Discussion

When using portfolio overwriting with high IV stocks, generating strikes using 2 SDs can result in lower-risk trades which can still generate significant cash flow. Strike selection is always based on both initial time-value return goal range as well as personal risk-tolerance.

Softcover Selling Cash-Secured Puts

Using stocks and stock options to develop a low-risk, wealth-building strategy for retail investors. Selling puts is a strategy similar to, but not precisely the same as, covered call writing. Mastering either strategy is a huge opportunity for retail investors to secure our financial futures. Mastering both will allow us focus on the best investment choices depending on market conditions and personal risk tolerance.

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. Hollywood Florida Money Show

April 8: Trading Panel

April 9: 2-hour Master Class

3:30 – 5:30

The Put-Call-Put (PCP) or Wheel Strategy

Using Both Covered Call Writing and Put-Selling to Generate Monthly Cash Flow

Selling stock options is a proven way to lower our cost-basis and beat the market on a consistent basis. Two such low-risk strategies are covered call writing and selling cash-secured puts. This presentation will detail how to incorporate both strategies into one multi-tiered option-selling strategy where we either generate cash-flow or buy shares of stock at a discount. I refer to this as the Put-Call-Put (PCP) Strategy, also referred to as the wheel strategy.

The basics and pros and cons of low-risk option-selling strategies will be discussed as well as an analysis of a real-life example and introduction into the BCI Trade Management Calculator (TMC). This seminar is appropriate for those who look to generate modest, but consistent, returns which will enable us to potentially beat the market on a consistent basis while focusing on capital preservation.

April 10: Portfolio Overwriting

11:40 – 12:25

Register here.

2. Sarasota Investment Group

Portfolio Overwriting: A Form of Covered Call Writing

Wednesday April 22, 2026

Details to follow.

3. 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).

4. American Association of Individual Investors: NYC Chapter

June 10, 2026, at 6 PM – 8 PM ET

More information to come.

5. MoneyShow Masters Symposium Las Vegas

July 20 – 22, 2026

Caesars Palace Hotel

Las Vegas

Details to follow.

6. Toronto Money Show

September 24 – 25, 2026

MaRS Center, Toronto Canada

7. Orlando Money Show

October 5 – 7, 2026

Hilton Orlando Lake Buena Vista

Details to follow.

Covered call writing and cash-secured puts are low-risk option-selling strategies that can be implemented even in challenging market environments. In the 1st quarter of 2026, the US has been experiencing uncertainty and volatility exacerbated by a war with Iran. This article will analyze a $100k defensive cash-secured put portfolio of mine where I used 4 elite-performing securities that resulted in a 22% annualized return.

4 Selected Stocks for the $100k Portfolio

• EQT Corp. (NYSE: EQT): $65.12 on 3/13/2026 (Friday)
• Vita Coco Company Inc. (Nasdaq: COCO): $59.12 on 3/13/2026 (Friday)
• Vista Energy SAB (NYSE: VIST): $66.43 on 3/16/2026 (Monday)
• Marvell Technology Inc. (Nasdaq: MRVL): $91.98 on 3/16/2026 (Monday)

Initial Cash-Secured Put Trade Calculations: BCI Trade Management Calculator (TMC)

• Red circle# days in trade
• Yellow cell: Breakeven price is $58.75
• Brown cells: Initial 5-8 day & annualized returns
• Blue cell: $ amount of premium collected
• Purple cell: % discount on initial price, if exercised

Initial Portfolio Total Returns

• 22.36% annualized
• $4906.00 cash reserve for exit strategies

Trade Status as of 3/20/2026 After 4 PM ET: All strikes expire OTM and worthless

All strikes expired out-of-the-money and worthless. There was no exercise and the initial return of 22% annualized was realized.

Discussion

Our covered call writing and cash-secured put trades can generate significant annualized returns, while still offering substantial protection to the downside. This article analyzed a 4-stock, $100k portfolio which resulted in a 22% annualized return during a volatile and down-market (down > 5% year-to-date) environment.

Stock Investing for Students

A Plan to Get Rich Slowly and Retire Young

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? The answer includes such factors as the social pressures facing our youth, certain pre-conceived ideas regarding our ability to successfully self-invest and the education or lack thereof needed to motivate our youth to undertake such a long-term project. The purpose of this book is to change that way of thinking and create a goal and a user-friendly methodology that will facilitate a plan which will allow you to retire financially securely at a relatively young age.

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. Hollywood Florida Money Show

April 8: Trading Panel

April 9: 2-hour Master Class

3:30 – 5:30

The Put-Call-Put (PCP) or Wheel Strategy

Using Both Covered Call Writing and Put-Selling to Generate Monthly Cash Flow

Selling stock options is a proven way to lower our cost-basis and beat the market on a consistent basis. Two such low-risk strategies are covered call writing and selling cash-secured puts. This presentation will detail how to incorporate both strategies into one multi-tiered option-selling strategy where we either generate cash-flow or buy shares of stock at a discount. I refer to this as the Put-Call-Put (PCP) Strategy, also referred to as the wheel strategy.

The basics and pros and cons of low-risk option-selling strategies will be discussed as well as an analysis of a real-life example and introduction into the BCI Trade Management Calculator (TMC). This seminar is appropriate for those who look to generate modest, but consistent, returns which will enable us to potentially beat the market on a consistent basis while focusing on capital preservation.

April 10: Portfolio Overwriting

11:40 – 12:25

Register here.

2. Sarasota Investment Group

Portfolio Overwriting: A Form of Covered Call Writing

Wednesday April 22, 2026

Details to follow.

3. 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.

4. American Association of Individual Investors: NYC Chapter

June 10, 2026, at 6 PM – 8 PM ET

More information to come.

5. MoneyShow Masters Symposium Las Vegas

July 20 – 22, 2026

Caesra’s Hotel

Las Vegas

Details to follow.

6. Toronto Money Show

September 24 – 25, 2026

MaRS Center, Toronto Canada

7. Orlando Money Show

October 5 – 7, 2026

Details to follow.

In bear, volatile and uncertain market environments, covered call writers turn to ITM call strikes and protective puts to create greater protection to the downside. In this article, the pros & cons of each hedging technique will be analyzed using a real-life example with NVIDIA Corp. (Nasdaq: NVDA).

Why consider ITM call strikes in challenging market environments?

ITM calls strikes have intrinsic-value components to them (the amount the strike is lower than current market value). This component of the option premium, along with its time-value component will lower the breakeven price point to a greater extent than ATM or OTM call strikes, which have only time-value premium. This additional (limited) downside protection is paid for by the option-buyer (not us) in the form of intrinsic-value. In return from benefitting from taking this defensive posture, we are eliminating any additional income from share price acceleration.

Why consider protective puts (collars) in challenging market environments?

Adding protective puts to our covered call trades (collars) costs money. We, the option sellers, pay for it. Collar trades should be established with a net option credit which will result in a positive initial return, some upside potential, a small zone for potential losses and then protection all the way down to zero (catastrophic share loss is avoided).

Real-life example with NVDA: 1-month Option chain on 10/29/2025

• For an ITM covered call, we’ll select the $195.00 strike, which has a bid price of $20.30
• For the protective put/ collar trade, we’ll select the OTM $210.00 strike which has a bid price of $11.85, and the $195.00 protective put which has an ask price of $5.75
• The net option credit for the collar is $6.10 ($11.85 – $5.75)

Comparing calculation returns for both approaches using the Trade Management Calculator (TMC)

• THE ITM $195.00 call lowers the BE price to $188.63 (red arrow)
• The collar lowers BE price to $202.83, (blue arrow) but will then also protect against catastrophic share price decline below the $195.00 put strike
• The initial time-value return for the ITM strike is 3.27%, 38.46% annualized (brown cells)
• The initial time-value return for the collar is 2.92%, 34.38% annualized (pink cells) with an additional upside potential of 0.51% (blue cell)

Summarizing returns and protection

• The initial returns are similar so path selection should not be based on initial calculations
• The ITM call offers protection down to $188.63, with risk of share value loss from that point down to zero (of course, we would initiate exit strategy intervention way before zero!)
• The collar offers protection down to $202.83 and then from $195.00 down to zero, leaving a risk range between $202.83 and $195.00
• Given these calculations, each investor can decide which approach aligns best with their personal risk tolerance and strategy goals as both offer significant protection for our covered call trades

Discussion

In bear, volatile and uncertain market conditions, covered call writers can generate significant annualized returns while still crafting their trades to garner substantial protection to the downside. In this article, ITM call strikes and adding protective puts (collars) were analyzed.

PREMIUM MEMBERSHIP & New Member Discount Coupon

$200.00 DISCOUNT COUPON: For new annual members: join200

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. Hollywood Florida Money Show

April 8: Trading Panel

April 9: 2-hour Master Class

3:30 – 5:30

The Put-Call-Put (PCP) or Wheel Strategy

Using Both Covered Call Writing and Put-Selling to Generate Monthly Cash Flow

Selling stock options is a proven way to lower our cost-basis and beat the market on a consistent basis. Two such low-risk strategies are covered call writing and selling cash-secured puts. This presentation will detail how to incorporate both strategies into one multi-tiered option-selling strategy where we either generate cash-flow or buy shares of stock at a discount. I refer to this as the Put-Call-Put (PCP) Strategy, also referred to as the wheel strategy.

The basics and pros and cons of low-risk option-selling strategies will be discussed as well as an analysis of a real-life example and introduction into the BCI Trade Management Calculator (TMC). This seminar is appropriate for those who look to generate modest, but consistent, returns which will enable us to potentially beat the market on a consistent basis while focusing on capital preservation.

April 10: Portfolio Overwriting

11:40 – 12:25

Register here.

2. Sarasota Investment Group

Portfolio Overwriting: A Form of Covered Call Writing

Wednesday April 22, 2026

Details to follow.

3. 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.

4. American Association of Individual Investors: NYC Chapter

June 10, 2026, at 6 PM – 8 PM ET

More information to come.

5. Toronto Money Show

September 24 – 25, 2026

MaRS Center, Toronto Canada

6. Orlando Money Show

October 5 – 7, 2026

Details to follow.