Decide whether to hold, close, or roll a covered call when assignment risk rises.
decision-trail comparison common-trap-callout The income trade Sara owns 100 shares at $42 and sold the 45 call. The stock is now $46.20 and goes ex-dividend tomorrow. A covered call is not free income; it is income in exchange for a capped sale outcome. Risk treatment Income goal -> Share-sale acceptance -> Assignment plan The covered call is clean only when the trader accepts the strike as a possible sale price. Income only Sell calls and hope assignment never happens. The trader owns the tradeoff before the market enforces it. Covered-call premium is compensation for giving someone else upside rights. 01…
Sign up free — one personalized lesson every day, matched to your role and goals.
Already have an account? Sign in