Covered Call Questions, Answered

Covered call basics

What is a covered call in simple terms?

A covered call means you own at least 100 shares of a stock and sell someone the right to buy those shares from you at a set price (the strike) by a set date. In exchange you collect cash upfront — the premium — which you keep no matter what happens. It works like collecting rent on shares you already own.

How do I find the best covered call to sell this week?

Screen for calls 30-45 days from expiration at roughly a 0.20-0.35 delta on liquid stocks you own, then compare annualized yield across candidates. Covered Call Pro runs this scan across roughly 350 US stocks every market day and ranks the results — the top-ranked pick is free at coveredcallpro.co/best-covered-calls-today.

What happens if my covered call gets assigned?

Your shares are sold at the strike price, and you keep both the premium and any gain up to the strike. Assignment is not a loss — it is the capped-upside outcome you agreed to. Many income sellers simply re-buy shares (or sell a cash-secured put) and start the next cycle.

Can I lose money selling covered calls?

Yes — if the stock falls more than the premium you collected, the position loses value, exactly as it would if you only held the shares. The premium cushions the first few percent of decline but does not protect against a real drawdown. Covered calls also cap your upside at the strike price.

What is the wheel strategy?

The wheel alternates two income strategies: sell cash-secured puts until you are assigned shares, then sell covered calls on those shares until they are called away, then repeat. Each leg collects premium. It suits investors comfortable owning the underlying stock at the put strike.

Income expectations

How much can I make selling covered calls on 100 shares?

A conservative 30-45 day covered call at a 0.20-0.35 delta typically collects roughly 0.5-1.5% of the stock value per month. On 100 shares of a $200 stock (a $20,000 position), that is roughly $100-$300 per month. High-volatility names pay more; assignment risk rises with premium.

How much monthly income can a $100,000 portfolio generate with covered calls?

At the conservative 0.5-1.5% monthly range, a $100,000 portfolio of optionable stocks in 100-share lots can collect roughly $500-$1,500 per month in premium. Actual results depend on which stocks you own, current implied volatility, and strike selection — and assignment months can convert premium income into realized stock sales.

Are covered call premiums guaranteed income?

The premium itself is yours to keep the moment you sell the call — that part is certain. But total return is not guaranteed: the stock can fall, and your upside is capped at the strike. Treat premiums as compensation for accepting those tradeoffs, not free money.

Do covered calls beat dividends for income?

Covered call premiums on liquid, moderately volatile stocks typically run 3-5x the income of the same stock's dividend yield, and you collect them on your schedule. The tradeoff: dividends do not cap your upside, while covered calls do. Many income investors combine both on the same shares.

Retirement, taxes, and accounts

Can I sell covered calls in an IRA or retirement account?

Yes — covered calls are among the few options strategies most US brokers permit in IRAs, because the shares fully cover the obligation. You typically need level-1 options approval. Premiums earned inside an IRA are tax-deferred (or tax-free in a Roth), which sidesteps the short-term capital gains treatment premiums usually get in taxable accounts.

Are covered calls good for retirees?

Covered calls fit retirees who hold blue-chip stocks and want monthly cash flow without selling shares — the strategy is conservative by options standards and brokers approve it at the lowest options level. The honest caveats: upside is capped, and a market decline still hits the underlying shares.

How are covered call premiums taxed?

In the US, premiums are generally short-term capital gains in the year the option expires, is closed, or is exercised — regardless of how long you have held the shares. Deep in-the-money calls can also suspend the holding period on the underlying under IRS straddle rules. In an IRA the question disappears. Consult a tax professional for your situation.

Choosing strikes and timing

What delta should I sell covered calls at?

Most income-focused sellers target 0.20-0.35 delta — roughly a 20-35% chance of assignment. Lower delta keeps your shares more often but pays less; higher delta pays more but caps upside sooner. Covered Call Pro's default scan centers on this conservative range.

Are weekly or monthly covered calls better?

Monthlies (30-45 days) collect more premium per trade, need less attention, and sit in the steepest part of time decay. Weeklies compound faster in flat markets but demand weekly management and rack up more assignment events and transaction costs. Most income sellers start with monthlies.

Should I sell covered calls before earnings?

Premiums are richest before earnings because implied volatility is elevated — but so is the chance of a large gap through your strike (missing the rally) or a drop the premium barely cushions. Conservative sellers either skip the earnings cycle or sell strikes further out of the money. Always check the earnings date before selling.

About Covered Call Pro

Is Covered Call Pro free?

The free tier includes the top-ranked covered call pick each market day, the income calculator (no account required), the weekly yield index, and 180+ educational guides. Full ranked daily picks and portfolio income tracking are $19.99/month or $199.99/year with a 30-day money-back guarantee.

How does the Covered Call Pro screener rank covered calls?

Every market day it scans roughly 350 optionable US stocks and scores each setup on three factors — annualized yield (income per dollar), delta (probability of keeping your shares), and days to expiration (time-decay efficiency) — producing one ranked list from best to worst risk-adjusted income. The methodology is public at coveredcallpro.co/methodology.

Does Covered Call Pro connect to my brokerage account?

No. Covered Call Pro is a screening and education tool — it never connects to your broker, never holds funds, and never places trades. You place every trade yourself at your own brokerage. Screening results are educational, not investment advice.

Where does Covered Call Pro get its options data?

Options and stock data come from Polygon.io, an institutional-grade US market data provider. The screener refreshes every market day, and per-ticker pages show the latest scanned premium, strike, delta, and annualized yield for each stock.