How to Sell Monthly Covered Calls Without Getting Burned
How to Sell Monthly Covered Calls Without Getting Burned
For investors, monthly covered calls offer predictable income and lower time decay than weeklys. But not all monthly setups are safe — and many new traders get burned by:
- ⛔ Surprise earnings announcements
- ⛔ Illiquid options with low open interest
- ⛔ Premiums that look attractive but carry high volatility risk
🧠 Know the Monthly Expiry Date
Standard monthly options in Canada expire on the third Friday of each month. Make sure your covered call aligns with this to benefit from optimal liquidity and premium.
🔍 Use These Filters Before You Trade
- ROO (%) – Look for at least 2% return on option to justify the trade
- Exclude Earnings – Avoid stocks with earnings within 30 days of expiry
- Open Interest – Minimum 100 OI for smooth execution and exit
- Delta – Aim for 0.20–0.35 for balanced risk and reward
- News Sentiment – Avoid stocks with bearish headlines
These filters can help eliminate 80% of high-risk trades — without sacrificing yield.
📆 When to Sell Monthly Covered Calls
- 1–2 weeks before expiry: Best for time decay and premium
- Avoid last-minute trades: Limited time for theta to work
- Roll early if assigned risk increases
💡 Pro Tip: Use Optrader’s Expiry Filter
Optrader.ca lets you filter for specific expiry dates and automatically highlights trades that align with monthly cycles. Combine this with ROO %, sentiment, and adjusted metrics to avoid the “looks good but burns you” trades.
