Covered call income selling monthly options
This is a covered call strategy on stocks you already own, selling monthly calls at a 0.30 delta above your cost basis, buying them back at 50% profit, and rolling or letting shares go if assigned.
- Market
- Options
- Style
- Range
- Timeframe
- Position weekly and up (1mo)
- Level
- Beginner
- Tools
- Price only
- Saved
- 1 time
- Run
- 0 times
Tested
Testing needs market data for this symbol. Past results do not guarantee future results.
The rules
Setup
| Lane (first to light up) | options |
| Instrument(s) | stocks (e.g., SPY) |
| Primary timeframe | monthly |
Trigger
Not set.
Entry
| Entry trigger | Sell one call per 100 shares, 30-45 days to expiration, at 0.30 delta strike above cost basis |
| Order type | Sell to open |
Stop
Not set.
Exit
| Trailing stop method | Buy back when call has lost 50% of its value, then sell next month |
Risk
Not set.
Strengths
- Generates income from existing holdings without adding new risk to the downside beyond what you already have.
- Systematic exit on call winners at 50% profit locks in gains and keeps the cycle moving.
- Never selling below cost basis protects against locking in a loss on the stock itself.
Risks
- Capped upside: if the stock rallies hard, you miss most of the gain and may get shares called away at a lower price than the market.
- Assignment risk: if the stock closes above the strike, you lose the shares, which may trigger taxes or disrupt your long-term plan.
- Rolling up and out can increase exposure or extend the time to recover if the stock drops after rolling.
Source
A JustWavey pick: a well known public strategy, written out in plain words by the JustWavey team.
Version history
| Version | Saved | Changed boxes |
|---|---|---|
| 1 | 2026-10-17 | First version |
You could lose all of your money, and we do not guarantee any refunds, explanations, or funding.