Stock + Covered Calls — explained simply

How our strategy works

We use AI signals to identify the right stocks, then sell covered calls on every position to collect consistent premium income. No guesswork, no complicated setups.

Two income streams. One strategy.

Most traders rely on a stock going up to make money. Our strategy earns two ways simultaneously — price appreciation and option premium, regardless of whether the market is trending or choppy.

📈

Layer 1 — Stock gains

Our AI analyzes the market continuously, identifying the highest-conviction opportunities across technical momentum, fundamental strength, and market conditions. Each position comes with defined profit targets and risk management built in.

💰

Layer 2 — Option premium

While holding each stock, we sell a covered call — collecting cash upfront. This income lands in the account immediately on every qualifying position, adding a consistent second income stream on top of stock gains.

What's a covered call?

Beginner-friendly

A covered call is a simple agreement where you, as the stock owner, sell someone else the option to buy your shares at a set price by a set date — in exchange for cash paid to you right now. You don't need to do anything fancy. Here's how it plays out:

Example: NVDA positionSTRONG_BUY signal
①
Signal fires. You buy 100 shares of NVDA at $500/share ($50,000 position).
②
Sell a covered call. You sell a 30-day call option with a $550 strike price (above current price). The buyer pays you $300 in premium — immediately.
③
The option expires. One of two things happens:
✅
Stock stays below $550
The option expires worthless. The buyer walks away. You keep your 100 shares and the $300 premium. Sell another call next month and repeat.
📤
Stock rises above $550
Shares are "called away" — sold at $550. You earn $50/share in stock gain ($5,000) plus the $300 premium. Total: $5,300 profit on a $50k position.
Key insight: Either way, you profit. The premium is yours to keep no matter what the stock does. The only downside is missing out on gains above $550 — but that's a trade-off you choose to make.
$550
Strike price
Above your entry ($500)
$300
Premium collected
Cash in hand immediately
$497
Break-even downside
Stock can dip and you still profit

How a trade unfolds, step by step

From signal to exit, here's exactly what happens on every position we run.

1

AI signal fires

Our scoring engine continuously analyzes the market and identifies the highest-conviction opportunities — where multiple factors align across trend, momentum, volume, and fundamentals. Only the top-ranked setups get a position.
2

Stock position opened

A position is sized to keep the portfolio diversified across multiple concurrent holdings. A stop-loss and take-profit are set automatically at entry so risk is defined from day one.
3

Covered call sold immediately

As soon as a stock is held, a covered call is sold above the current price — but only when the premium is meaningful. This quality filter ensures we only sell calls when the income justifies it.
4

Premium lands in account

The option premium hits the account the same day. This cash is yours regardless of what happens next. It lowers your effective cost basis and cushions any downside.
5

Position closes (one of three ways)

  • → Take profit: stock hits the target — sell shares, keep premium.
  • → Stop loss: stock drops to the stop — sell shares, premium partially offsets the loss.
  • → Called away: stock rises past the strike and the option is exercised — shares sold at strike price, premium kept.
6

Repeat

Capital is recycled into the next signal. The cycle continues as new signals are generated and positions rotate.

Strategy flow

🔍
Signal fires
High conviction
→
📦
Buy stock
Diversified sizing
→
💰
Sell call
Collect premium
→
⏱️
Hold position
Managed exits
→
🔄
Exit & repeat
Recycle capital
Premium income: collected at step 3, kept regardless of outcome
Risk management: stop-loss limits worst-case loss on every trade
Consistency: multiple simultaneous positions diversify single-stock risk

Proven track record

The combined Stock + Covered Calls strategy has outperformed buy-and-hold SPY by a wide margin in backtesting, including during bear market conditions. Premium income consistently added meaningful returns on top of stock gains.

+25.42%/yr
Combined annualized return
vs SPY +11.05%/yr
+198.76%
Total return (backtest)
Stock + premium combined
+14.37%/yr
Alpha vs buy-and-hold
Consistent outperformance

Full backtest methodology, yearly breakdown, and trade-level detail available on the Track Record page.

Is this strategy right for you?

Good fit if you…

✓ Already own or plan to own individual stocks
✓ Want consistent income beyond price appreciation
✓ Are comfortable holding a stock for a few weeks
✓ Understand you may occasionally sell shares earlier than planned
✓ Have a brokerage account that allows covered calls (most do)

Not ideal if you…

✕ Need to liquidate positions on short notice
✕ Want to hold a stock indefinitely without any exit
✕ Are looking for a guaranteed fixed return
✕ Are not approved for options trading at your broker
✕ Prefer a fully passive, set-and-forget approach

Risks to understand

Capped upside
When you sell a covered call, you agree to sell your shares at the strike price. If the stock rallies far above the strike, you miss those extra gains. The premium you collected is the trade-off.
Stock can still fall
Covered calls provide a small cushion (the premium), but they do not protect against large drops. Our stop-loss discipline is your primary downside protection — but losses are still possible.
Premiums vary by market conditions
When volatility is low, option premiums shrink. Some positions won't qualify for a covered call when premium is insufficient — in those cases, we simply hold without one. Future premiums may differ from historical estimates.
Options approval required
Most brokers require you to apply for Level 1 options approval to sell covered calls. The process is simple — typically a short questionnaire about your experience — but it is a required step.

See the verified results

Every trade, every premium collected, every exit — fully documented. No simulations hidden behind a paywall.

View Today's SignalsView Track Record
Disclaimer: The strategy described is educational in nature. Backtest results are hypothetical and based on historical data — actual premiums vary based on implied volatility, liquidity, and market conditions. Results do not account for commissions, bid-ask spreads, taxes, or assignment costs. Options trading involves substantial risk and is not appropriate for all investors. You can lose money. Past performance does not guarantee future results. Not financial advice. Always consult a qualified financial advisor before trading.