Glossary · reference sheet · Options
Covered Calls & CSPs
The two income workhorses — mechanics and tradeoffs.
Covered call
- SetupOwn 100 shares + sell 1 call, 30–45 DTE, ~5–8% OTM.
- IncomePremium collected; annualized ≈ premium ÷ price × (365/DTE).
- CostUpside capped at strike — you sell your best case.
- ManagementExit at ~50% profit or ~21 DTE; roll up/out if challenged.
Cash-secured put
Honest expectations
- Yield realityGood premium selling historically ≈ 8–15%/yr with equity-like drawdowns.
- Not freeIncome is payment for accepting the tail — know the tail.
How to use this sheet
Read a row as a claim, not a fact: the term, what it means, and the condition that makes it matter. Each term has its own page, and the lessons it belongs to are linked from there.
Learn content is for education only — not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk. Examples are simplified and historical patterns never guarantee future results.