Elite-performing securities with high implied volatility represent good news/bad news scenarios for our covered call portfolios. The good news is the high premium yields received. The bad news is the risk to the downside. This article will analyze an approach to using these stocks and ETFs to generate significant returns while still aligning with our capital preservation goal. To accomplish this, we will identify the implied volatility (IV) and then use Delta and calculations to guide us to appropriate low-risk, high-yield potential trades.
Real-life example with Global X Uranium ETF (NYSE: URA)
On 9/22/2025, URA, an exchange-traded fund, was trading at $49.43. Since this is a high IV ETF, we can opt for ITM covered calls where the intrinsic-value component of the premium will create greater protection to the downside. We also want to confirm that these defensive trades will still generate adequate returns to justify the trades.
URA 1-month option chain to access the at-the-money IV
- The $49.00 near-the-money strike shows an IV of 47%
- This was triple that of the S&P 500
- To use this elite-performer, while taking a defensive posture, we turn to in-the-money (ITM) call strikes
- Will these ITM strikes provide protection to the downside while still offering significant time-value profit returns?
The significance of Delta when selecting defensive ITM strikes
One of the three definitions of Delta is the approximate probability of the option strike expiring ITM. We want the option to expire ITM to maximize our trade results. For example, if a stock is trading at $50.00 and we sell a $40.00 ITM call for $11.00, we will maximize our return as long as share value remains above the $40.00 strike. Delta will quantify that expectation. Therefore, when we analyze an option chain, we want a high Delta strike that also returns our pre-stated initial time-value goal range. This range is lower than for traditional (more aggressive) covered call writing.
URA 1-month option chain for high Delta strikes
- The $42.00 deep ITM call strike shows a delta of 90.6%
- This means there is approximately a 90.6% probability that URA will expire ITM, which is what we want
- The risk of expiring OTM and subject to losses is 9.4%
- If this risk factor aligns with our personal risk-tolerance, we turn to the BCI Trade Management Calculator (TMC) to see if we can generate our pre-stated initial time-value return goal range
- Let’s feed that $7.80 bid price (red circle) into our TMC
Initial trade deep ITM covered call calculations
- Red circle: This is a 26-day trade if taken through contract expiration
- The breakeven price (yellow cell) is $41.63 (from $49.43)
- The 26-day return is 0.88%, 12.37% annualized (brown cells)
- The downside protection of that time-value profit is 15.03% (purple cell)
- Is a > 12% annualized return with > 15% protection to the downside a trade you’d make? For most, yes; for some, no.
Discussion
Mastering options will allow us to convert high-volatility securities into low-risk option trades. Risk can be quantified using Delta and option chains along with the BCI TMC will provide initial calculations to complete the analysis.
Covered call writing is a cash-generating strategy that lowers our cost basis thereby improving our opportunities for successful investments. One of the many benefits of incorporating this strategy into our investment portfolios is that the system can be crafted to meet our trading style, market assessment, portfolio net worth and personal risk tolerance. This book details three such covered call writing-like strategies that will highlight:
- Portfolio Overwriting- using stocks in buy-and-hold portfolios
- The Collar Strategy- using protective puts
- The Poor Man’s Covered Call- using LEAPS options
Free training resources
Your generous testimonials
Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to publish several of these testimonials in our blog articles. We will never use a last name unless given permission:
I certainly wish I had learned about this sooner as I’m sure I would have been even further ahead, but better late than never!
Andrew
Upcoming events
1. Long Island Stock Investors Meetup Group: Part I
Thursday February 12, 2026
7:30 PM ET – 9:00 PM ET
Credit Spreads for Bull & Bear Markets
Introducing Our Latest Products, Creating New Investment Opportunities
2. Las Vegas Money Show- 2 presentations
February 23 – 25, 2026
The Collar Strategy: Covered Call Writing with Protective Puts
Protecting covered call trades from catastrophic share loss
This is the strategy Bernie Madoff pretended to use. He called it the split strike conversion strategy, but it was simply a collar. The covered call sets a ceiling on the trade and the protective put guarantees a floor on the trade
Topics discussed
- What is the collar strategy?
- Uses for the collar
- Entering a collar trade
- Option basics for calls
- Option basics for puts
- Real-life example with NVDA
- What is an option-chain?
- Real-life example using the BCI Trade Management Calculator (TMC)
- Strategy pros & cons
- Educational products & discount coupon
- Q&A
Selling Cash-Secured Puts to Buy a Stock at a Discount or to Enter a Covered Call Trade
2 outcomes & 4 applications
Selling cash-secured puts is a low-risk option-selling strategy which generates weekly or monthly cash-flow. This presentation will detail how to craft the strategy to generate cash flow, buy a stock at a discounted price or to initiate a covered call trade. Topics included in the webinar include:
- Option basics
- The 3-required skills
- 4-practical applications
- Traditional put-selling
- PCP (Put-Call-Put or wheel) Strategy
- Buy a stock at a discount instead of setting a limit order
Real-life examples along with rules, guidelines and calculations are included in this presentation.
Time, date & registration link.
3. Palm Beach Traders Club
March 10, 2026
6:30 PM – 8 Pm ET
Private Investment Club / guests are welcome (free)
Wine-tasting event follows for those interested.
4. Long Island Stock Investors Meetup Group: Part II
Thursday March12, 2026
7:30 PM ET – 9:00 PM ET
Ultra-Low-Risk Approaches to Covered Call Writing & Selling Cash-Secured Puts
Introducing Our Latest Products, Creating New Investment Opportunities
5. Hollywood Florida Money Show
April 10, 2026
11:40 AM – 12:25 PM
The Put-Call-Put (PCP) or Wheel Strategy
Using Both Covered Call Writing and Put-Selling to Generate Monthly Cash Flow
Selling stock options is a proven way to lower our cost-basis and beat the market on a consistent basis. Two such low-risk strategies are covered call writing and selling cash-secured puts. This presentation will detail how to incorporate both strategies into one multi-tiered option-selling strategy where we either generate cash-flow or buy a stock at a discount. I refer to this as the Put-Call-Put (PCP) Strategy, also referred to as the wheel strategy.
The basics and pros and cons of low-risk option-selling strategies will be discussed as well as an analysis of a real-life example and introduction into the BCI Trade Management Calculator (TMC). This seminar is appropriate for those who look to generate modest, but consistent, returns which will enable us to potentially beat the market on a consistent basis while focusing on capital preservation.
More details to follow.
6. Young Investor’s Club at The University of Central Florida
April 16, 2026
Private student investment club.
7. Sarasota Investment Group
Portfolio Overwriting: A Form of Covered Call Writing
Wednesday April 22, 2026
Details to follow.
8. BCI Educational Webinar #10: The Put-Call-Put (PCP) or “Wheel Strategy”
Thursday May 14, 2026, at 8 PM ET
Using both covered call writing & cash-secured puts in a multi-tiered option selling strategy. A 68-day real-life example taken from one of Alan’s portfolios will be analyzed.
BONUS: Barry will share a real-life credit spread trade using our BCI Conservative Credit Spread Management System.
Discount coupons and a live Q&A session will follow the presentation.
9. Orlando Money Show
October 5 – 7, 2026
Details to follow.
