Managing Covered Call positions · Invest & Retire Community

Mar 6 (edited) in Monthly passive income

Managing Covered Call positions

Since many in our group use covered calls for generating monthly income, I thought it would be a good topic to discuss and learn from each other, especially from

@Eric Seto

I am also tagging

@Loi Aqui

and

@Ian Bliss

since they had posted questions on that.

I have a number of TLT lots and keep adding. I am short calls against some of my shares. Specifically, I have a call $91 strike and another one $92 strike expiring next week. I am content with shares taken away, that was the original plan. However, looking at price action on bonds I think probability of them going lower is less than going higher. With that in mind I decided to roll my strikes up by $1.

I've been filled on 92 -> 93 roll and am waiting for the 91 -> 92. Math behind it:

I have paid .20 on 92 -> 93 roll. This is a bullish bet. I give myself a chance to get .80 paying .20. In other words, I am adding money to the position as it goes my direction.

Question to all: how do you guys decide on your action when the covered call is in the money approaching expiration?

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