My Covered Call Strategy - Comprehensive Guide / Tutorial For Writing Covered Calls


Well-Known Member
Re: My Covered Call Strategy - Comprehensive Guide / Tutorial For Writing Covered Cal

good to read-thanks

I would like to pen down my covered call writing strategy. As many would agree, this is one of the safest option strategies to implement - if you know what you are doing. I expect a return of around 15% per annum via premium income and 15% CAGR per annum via capital appreciation - net net a return of 30% CAGR over a long term. Yes - 30% CAGR is achievable via "buy and hold" strategy on fundamentally strong midcap stocks too. But my covered call strategy gives me the same returns with lower volatility and *almost* guaranteed monthly income.

Minimum investment required for this strategy is around Rs. 5 Lacs. Ideally, ANOTHER Rs. 5 Lacs should be invested in fundamentally strong stocks (I'll explain this part later).

This tutorial will have multiple sections -

Part I - How to pick the right stocks for the strategy

You select the wrong stock for the strategy and your returns go down the drain. So I'll be spending more time explaining how I select stocks for writing covered calls.

Part II - Which strike price to write call

We will only be writing far out of money calls - irrespective of the outlook on the stock or the market conditions. The idea is to increase the chances of keeping the premium, and not disturb the stock holdings as far as possible.

Part III - What to do with stock price falls or goes up drastically within a month.

Basically, we will be rolling up the calls when the stock price goes up and rolling down the calls when the stock price goes down.
Great Job Bro,
Its really Detailed, Very helpful, Need to know your Experience from this Post till today, request you to ping back if possible, Let me know any medium to communicate back
Came across this thread while searching on annualized return from covered call strategy.

Sorry for bouncing back this thread after 9 years !

But many of us would really like to know if there is any history of practicing CC. What is the annual ROI from this strategy ? Whether all the answers were found for the questions raised on 2012.

Appreciate any insight from practicing CC traders.
Can someone compare the payoff of covered call and selling put. It is exactly the same. Why do covered call when can simply sell put?