Time is your greatest ally when selling options, but it’s also a fickle friend. If you sell a 30-day call for $2.00 and it drops to $1.00 in just five days, you’ve captured 50% of your maximum profit in only 16% of the time.
If your stock skyrockets and your call goes deep "In-the-Money" (ITM), you face assignment—meaning your shares are sold. If you’ve held those shares for 11 months, being assigned would trigger a , which can be significantly higher than long-term rates. buying back covered calls
: You free up your shares to sell another call immediately, effectively compounding your returns. 2. Dodging the "Tax Trap" Time is your greatest ally when selling options,
: Buy it back. By closing the trade early, you eliminate the "gamma risk"—the danger that a sudden stock surge will wipe out your gains in the remaining 25 days. If you’ve held those shares for 11 months,
Options Trading: Covered Call Strategy Basics - Charles Schwab