Beware of the Shiney Object When Establishing Covered Call Trades
One of the more common oversights made by retail investors is their focus on premium dollar amounts rather than annualized returns. I consider this “dollar distraction” the shiny object that prevents us from focusing on the more pertinent annualized returns. In this article, I will be analyzing real-life examples with NVIDIA Corp. (Nasdaq: NVDA) to demonstrate how to avoid these shiny objects.
NVDA data on Jun 4, 2025
- NVDA trading at $141.39 on 6/4/2025
- The 6/6/2025 $144.00 call has a bid price of $0.72
- The 7/3/2025 $144.00 call has a bid price of $4.70
- The 6/18/2026 $144.00 call has a bid price of $27.20
- Can you see how enticing that 6/18/2026 premium can be for retail investors? Me too
NVDA 3-Option-Chains on 6/4/2025
NVDA Initial Calculations of the 3 Expiration Dates
- Calculations using the BCI Trade Management Calculator (TMC)
- The shortest-term 6/6/2025 expiration shows an initial 3-day return of 0.51%, 61.96% annualized
- The 30-day initial return is 3.32%, 40.44% annualized
- The longest-term, 380-day LEAPS initial return is 19.24%, 18.48% annualized
- We must avoid the “shiny object” dollar amount return from long-dated options and focus on the annualized returns
Discussion
When crafting our covered call trades, we must concentrate on the annualized returns, not the actual premium dollar amount. Even the initial % return must be viewed in the context of the time frame of the trade. For example, a 2% initial return r a 1-month contract obligation is appropriate for many of us. However, a 2% 6-month return just doesn’t cut it for a majority of retail investors. Watch out for the shiny object!
Covered Call Writing Package
Covered Call Writing Package – 5 Part Streaming Video Series + 137-Page Downloadable Companion Workbook
Our objective was to create the most complete and comprehensive video program on covered call writing found anywhere. The 4-set video curriculum takes us through the 3-required skills: stock selection, option selection, and position management. The 4th section highlights special circumstances like writing calls against long-term buy-and-hold portfolios.
You Will Learn:
– How to locate the greatest performing stocks for option-selling
– Which Is the best option to sell
– How To calculate your returns
– How To utilize exit strategies – Decrease losses & enhance gains
Free E-book on covered call writing
Use in conjunction with our Beginners Corner free video series on covered call writing (Free training link above)
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:
Alan & Barry,
I hope this finds you both well.
In May or June, you sent out a vid about how to deal with the current market, being conservative with deep ITM trades. So, I adopted that strategy and wanted to share my trade stats with you both. I could have done a bit more, but I’ve been holding some cash back. This month, I opened 6 positions and 5 have already closed out with a profit, and it’s a long month. In October, I think my entry positions are 1-2 strikes deeper than before, so not as profitable, but not horrible.
| Month | Trades | Winners | Losers | Income |
| June | 17 | 13 | 4 | $ 3,174 |
| July | 16 | 16 | 0 | $ 1,737 |
| August | 19 | 17 | 2 | $ 2,962 |
| Sept | 15 | 15 | 0 | $ 2,231 |
| October | 9 | 9 | 0 | $ 2,045 |
| 5 Mo. Totals | 76 | 70 | 6 | $ 12,149 |
Thank you both for sharing your brains with the BCI community.
John
Sample trade video
1. Money Masters Symposium Sarasota Florida
December 1 – 3,2025
Setting Up Option Portfolios Using Stock Selection, Diversification, Cash Allocation and Calculations
Analysis of 6 covered call writing trades
Minimize risk and maximize returns. These are our 2 main goals when crafting our option portfolios. There are several factors we can utilize which will put ourselves in an outstanding position to achieve these objectives. Here is a summary of those factors which will be addressed during this presentation:
- Select elite-performing stocks and ETFs
- Diversity stock positions as well as their industries
- Allocate a similar amount of cash per-position
- Ensure that initial calculations align with strategy goals and personal risk-tolerance
- Once trades are entered, go into position management mode- be prepared for exit strategy opportunities
2. BCI Educational Webinar #9
Thursday January 15, 2026
8 PM ET – 9:30 PM ET
Topic, description and registration information to follow.
3. Long Island Stock Investors Meetup Group: Part I
Thursday February 12, 2026
7:30 PM ET – 9:00 PM ET
Topic, description and registration information to follow.
4. Long Island Stock Investors Meetup Group: Part II
Thursday March12, 2026
7:30 PM ET – 9:00 PM ET
Topic, description and registration information to follow.
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