That’s where the covered call comes in.
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The Covered Call Decision: Selling the $94 Call 🧠
I sold 1 IAU call option with the following details:
• Strike price: $94
• Premium received: ~$2.00
• Time to expiry: ~4 days
• Position: Covered (I own the shares)
This immediately achieved three objectives.
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Objective 1: Locking in Income Immediately 💵
By selling the call, I received $200 upfront (since options are for 100 shares).
That money is realized profit the moment the trade is filled.
No matter what happens next:
• If IAU drops → I keep the premium
• If IAU goes sideways → I keep the premium
• If IAU rises above $94 → I still keep the premium
This instantly transformed paper profit into cash.
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Objective 2: Defining a Profitable Exit 🎯
Selling the $94 call means I agree to sell my shares at $94 if assigned.
Given my true cost basis of ~$91.50, this is a very good outcome:
• Capital gain from $91.50 → $94 = $2.50 per share
• Plus option premium received = $2.00 per share
• Total potential gain = $4.50 per share
That’s $450 on 100 shares, in a short time, on gold — without leverage.
If IAU gets called away, I’m not losing. I’m exiting at a profit I pre-approved.
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Objective 3: Reducing Emotional Decision-Making 🧘♂️
One underrated benefit of covered calls is mental clarity.
Once the call is sold:
• There is no panic on small pullbacks
• No FOMO on every uptick
• No need to “decide” every hour
The trade becomes rules-based instead of emotional.
Either:
• The option expires worthless → win
• Or shares get called away → win
This removes stress, which is crucial for consistency.
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Why I Chose the $94 Strike Specifically 🔍
This wasn’t random.
The $94 strike was:
• Slightly below the current market price
• Close enough to generate high premium
• At a level I was happy to sell
Many traders only sell out-of-the-money calls. I deliberately chose a near-the-money call because:
• I wanted maximum premium
• I was okay being assigned
• My cost basis gave me room
This is an important mindset shift:
Don’t sell calls based on hope — sell them based on your real cost.
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Time Decay: Letting Theta Work for Me ⏳
With only 4 days to expiry, the option’s value decays fast.
Every day that passes:
• Time value drops
• Buyer loses edge
• Seller gains edge
Even if IAU stays flat, the option price naturally declines. That’s the power of short-dated covered calls.
Instead of predicting direction, I was selling time itself.
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What If Gold Suddenly Rallies? 🚀
This is the common fear.
“Yes, but what if gold explodes higher?”
Two answers:
1. I still profit
• I sell at $94
• I keep the $2 premium
• I exit with a strong gain
2. No regret trade
• Covered calls are about planned exits
• Missing upside is not the same as losing money
Trading is about consistency, not catching every last dollar.
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What If Gold Pulls Back? 📉
This scenario is actually even better.
If IAU falls below $94 and stays there:
• The option expires worthless
• I keep my shares
• I keep the $200 premium
That premium effectively lowers my cost basis further, possibly below $91.
From there, I can:
• Sell another covered call
• Or exit shares later
• Or trade around the position again
Income first, decisions later.
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Covered Calls as Profit Protection, Not Just Income 🛡️
Many people think covered calls are just for yield.
In reality, they are also:
• A hedge against pullbacks
• A way to monetize consolidation
• A tool to enforce discipline
In this trade, the covered call acted as a profit-protection mechanism, not speculation.
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Lessons From This Trade 📚
1. Know Your True Cost Basis
Active trading matters. Your real cost is not always what the platform shows.
2. Covered Calls Are Strategic, Not Passive
Strike selection reflects intent — income vs exit vs protection.
3. Premium Is Realized Profit
Cash today is more valuable than hope tomorrow.
4. Gold Is Perfect for Options Income
Range-bound behavior + macro uncertainty = great option selling environment.
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Final Thoughts: Trading Like a Business 🧠💼
This IAU trade wasn’t about predicting gold prices.
It was about:
• Managing risk
• Protecting gains
• Getting paid for patience
By selling a $94 covered call for $2, I transformed a floating $200 profit into structured, repeatable income, while defining a profitable exit based on my lower true cost of ~$91.5.
That’s not gambling.
That’s process-driven trading.
And over time, that’s what compounds
@Tiger_Contra @Esther_Ryan @MillionaireTiger @Daily_Discussion @TigerEvents @TigerStars @sia @Shernice軒嬣 2000 @Pilates @LawrenceSG $Gold Trust Ishares(IAU)$
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