Better Covered Calls

Most introductory texts present the covered call as a single-recipe trade: own 100 shares, sell one call one strike out of the money, repeat monthly. That recipe works — but small adjustments materially improve risk-adjusted returns.

1. Sell skew, not strike

Pick the call where implied volatility is highest relative to the rest of the chain — usually 5-15% out of the money. Volatility skew, not absolute strike level, drives premium quality.

2. Match expiration to event risk

If earnings or a Fed meeting falls inside the call's life, you collect premium for taking that risk. If you specifically don't want to be short gamma over an event, sell the cycle that ends just before it.

3. Roll mechanically, not emotionally

Define the roll trigger up front: "if the call drops to 20% of premium, buy it back and resell." Mechanical rolls beat ad-hoc decisions because they remove the emotional pull of a winning trade.