Monthly vs Weekly Covered Calls

Both monthly and weekly covered calls have advantages. Here's how to choose.

Monthly Covered Calls

Pros:

  • Less management required
  • Lower trading costs
  • More premium per trade
  • Easier to manage around events

    • Cons:

  • Lower annualized return potential
  • Less flexibility
  • More time for things to go wrong

    • Weekly Covered Calls

    Pros:

  • Higher annualized returns (potentially)
  • More flexibility
  • Can avoid specific events
  • Faster premium collection

    • Cons:

  • More active management
  • Higher trading frequency
  • Smaller absolute premium
  • Gamma risk near expiration

    • Comparison Example

    $100 stock, sell 5% OTM calls:

    | Frequency | Premium | Annual Trades | Annual Return | Monthly$2.0012$24/share | Weekly | $0.55 | 52 | $28.60/share |

    Weekly has higher potential but requires 4x the trades.

    Recommendation

  • Beginners: Start with monthly
  • Active traders: Consider weekly
  • Busy investors: Stick with monthly
  • Income focused: Test both, track results