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Ep9 - Effing Around and Finding Out Why Covered Calls Work

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Content provided by Wealth Building With Options. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Wealth Building With Options or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://ppacc.player.fm/legal.

Welcome back, Wealth Builders! In this episode, Dan Passarelli takes a deep dive into why covered calls continue to outperform the market over time—but only when done right. If you've ever wondered what gives covered calls their edge, this is your episode.

Key Topics Covered
  • The Truth Behind Covered Calls: Why the strategy works statistically—but why most investors still fail with it.
  • The Option Greeks Breakdown:
    • Delta (directional sensitivity)
    • Theta (time decay)
    • Vega (volatility sensitivity)
  • The Hidden Edge: Risk Premium: How options have historically been overpriced since the 1987 crash, and how sellers can benefit.
  • Volatility & Market Inefficiency: A critique of the Efficient Market Hypothesis and what it means for options traders.
  • Why Repetition Matters: The compounding edge of consistently selling covered calls over time.
  • Guest Interview: Henry Schwartz, VP of Market Intelligence at Cboe Global Markets, shares expert insights into the structural reasons options tend to be overpriced and how sellers can harness that edge.

“The price one can sell an option for is greater than the value it adds. That’s the whole magic of covered calls.” – Dan Passarelli

Free Gift: Covered Call Strategy Guide

Leave a review on Apple Podcasts, Spotify, or wherever you listen.
Then:

  1. Take a screenshot of the review.
  2. Post it to our Substack or on social media.
  3. Use the hashtag #WBWO.

And we’ll send you Dan’s Covered Call Strategy Guide for free!

Mentioned in This Episode Tools for Traders

Don't miss Episode 10 with a very special surprise guest—someone with game-changing insight into options trading that you won’t want to miss.

Until then...
Invest excellently.

  continue reading

22 episodes

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iconShare
 
Manage episode 475851742 series 3648880
Content provided by Wealth Building With Options. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by Wealth Building With Options or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://ppacc.player.fm/legal.

Welcome back, Wealth Builders! In this episode, Dan Passarelli takes a deep dive into why covered calls continue to outperform the market over time—but only when done right. If you've ever wondered what gives covered calls their edge, this is your episode.

Key Topics Covered
  • The Truth Behind Covered Calls: Why the strategy works statistically—but why most investors still fail with it.
  • The Option Greeks Breakdown:
    • Delta (directional sensitivity)
    • Theta (time decay)
    • Vega (volatility sensitivity)
  • The Hidden Edge: Risk Premium: How options have historically been overpriced since the 1987 crash, and how sellers can benefit.
  • Volatility & Market Inefficiency: A critique of the Efficient Market Hypothesis and what it means for options traders.
  • Why Repetition Matters: The compounding edge of consistently selling covered calls over time.
  • Guest Interview: Henry Schwartz, VP of Market Intelligence at Cboe Global Markets, shares expert insights into the structural reasons options tend to be overpriced and how sellers can harness that edge.

“The price one can sell an option for is greater than the value it adds. That’s the whole magic of covered calls.” – Dan Passarelli

Free Gift: Covered Call Strategy Guide

Leave a review on Apple Podcasts, Spotify, or wherever you listen.
Then:

  1. Take a screenshot of the review.
  2. Post it to our Substack or on social media.
  3. Use the hashtag #WBWO.

And we’ll send you Dan’s Covered Call Strategy Guide for free!

Mentioned in This Episode Tools for Traders

Don't miss Episode 10 with a very special surprise guest—someone with game-changing insight into options trading that you won’t want to miss.

Until then...
Invest excellently.

  continue reading

22 episodes

All episodes

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Dan Passarelli kicks off this episode with a wild story from the trading floor—complete with Hulk-like rage and a colorful nickname—and uses it to dive deep into one of the most powerful and misunderstood ideas in options trading: synthetic positions. This episode explores how synthetics reveal the truth about covered calls and cash-secured puts—that they are, in fact, two sides of the same coin. Dan unpacks the logic behind synthetics, the Greeks that drive them, and why understanding this can make you a sharper, more strategic investor. In This Episode: The infamous “Hey Butthole” trading floor story—and what it teaches about real-world trading Why a trader’s “172” call position wasn’t an error—it was a lesson in synthetics The delta-neutral mindset of market makers and how it unlocks synthetic thinking Covered calls vs. cash-secured puts: Why they’re synthetically identical (and when they’re not) Understanding put-call parity and its real-world implications The Greeks of synthetics: Delta, Theta, and the messy role of interest and early exercise How professional traders use synthetic stock, conversions, reversals, and synthetic straddles When a put and a call add up to more than 100 delta—and what that means How synthetics help you manage vertical spreads, identify arbitrage, and reduce capital requirements Why thinking in terms of synthetics leads to smarter, more flexible trading decisions Why It Matters: Understanding synthetics isn’t just academic—it’s foundational. If you truly grasp this concept, you’ll: Trade covered calls and cash-secured puts with more confidence Identify hidden equivalencies across strategies Improve capital efficiency and decision-making Spot arbitrage and mispricing opportunities others miss Quote of the Episode: “If I own 100 shares and I’m short one call, that’s a covered call. If I’m short a put at the same strike—guess what? At expiration, they behave exactly the same.” Don’t Miss: Next episode, Dan dives into buy-writes and how to use them effectively in today’s market conditions. Make sure you subscribe so you’re the first to know when it drops. Resources & Links: Trading Option Greeks – by Dan Passarelli Join the community at WealthBuildingWithOptions.Substack.com for bonus episodes, trade breakdowns, and monthly AMAs Disclaimer: Options involve risk and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options before trading.…
 
In this episode of Wealth Building with Options , host Dan Passarelli explores one of the most powerful, yet often overlooked, concepts in successful trading: edge. Whether you're seeking an advantage like a card counter at the blackjack table or building consistency through disciplined investing, edge—the measurable statistical advantage—is what separates consistent winners from the rest. What You'll Learn in This Episode: What edge really means in trading and how even a small edge can compound into powerful long-term results The three primary sources of edge every options investor needs to understand: Fundamental analysis (PE ratio, price-to-book, operating yield, current ratio) Technical analysis (support, resistance, moving averages, volume) Volatility analysis (historical vs. implied volatility, vertical skew, term structure) How smart investors use support and resistance levels to improve strike selection and time their trades more effectively Why volatility pricing can create opportunity if you know how to spot overpriced or underpriced options A practical framework for setting strike prices and choosing expirations for covered calls and cash-secured puts Dan also shares stories from the trading floor and insights from professional mentors, blending theory with real-world examples in a way that brings clarity to complex topics. Resources Mentioned: The Intelligent Investor by Benjamin Graham Buffettology by Mary Buffett How to Read a Financial Report by John and Tage Tracy Final Thoughts: Even a 1–2% edge can significantly improve your trading outcomes—especially when compounded over time. Dan explains how mastering these analytical tools can help you trade more confidently and profitably, while avoiding common mistakes. Subscribe to the show to catch Episode 22, where Dan dives deep into buy-writes and how to maximize capital efficiency using this foundational strategy. To support the show and get access to exclusive episodes, trade breakdowns, and AMAs, visit: wealthbuildingwithoptions.substack.com Options involve risk and are not suitable for all investors. Please review the Characteristics and Risks of Standardized Options before trading. To learn more about Dan Passarelli and the Market Taker Mentoring community, visit MarketTaker.com…
 
Description: You wouldn’t build a garden without a plan (or at least you shouldn’t ). And you sure as heck shouldn’t place a covered call or cash-secured put without knowing exactly why you’re doing it. In this episode, Dan shares a hilariously frustrating story about building a backyard garden with his daughter — and how forgetting one small measurement led to a big headache. Then he breaks down how that same mistake shows up in options trading when traders skip the fundamentals and just “wing it.” Covered calls and cash-secured puts might seem simple — but if you’re not following this checklist, you’re likely doing it wrong. This episode gives you the must-follow framework to avoid costly errors and start trading with clarity and confidence. You’ll Learn: The only two valid reasons to place a covered call or CSP — and why anything else is a red flag Why stocks under $30 are usually a waste of time for income strategies What the “10% Rule” is — and how it instantly tells you if your option is tradable How to use theta and “aggregate theta” to maximize your returns over time The rookie mistake traders make by ignoring volatility events like earnings (and how to avoid it) Key Insight: “You don’t get to think outside the box until you know what’s inside it.” Don’t Miss: Dan’s “Nail the Trade” checklist — the same system he’s been refining for 8+ years Why implied volatility isn’t always make-or-break — and when it is How to line up your trade with your actual investing plan , not just what “looks good” Be sure to read Characteristics and Risks of Standardized Options before investing with options. Options involve risk, only risk capital should be used.…
 
In this episode of Wealth Building with Options , Dan dives deep into the three critical criteria for selecting the best strike and expiration when selling cash-secured puts: Support levels Theta (both straight and aggregate) Implied volatility and skew Dan breaks down the logic behind what makes these factors so valuable—especially for investors who want to either generate premium or strategically acquire stock. He shares some "campfire knowledge" and real-world tactics that go far beyond theory and into practical application. Dan is joined by John Kmiecik, who shares how he guides students to find optimal support levels using multiple timeframes, how he filters out the chart “noise,” and what technical indicators (like RSI and moving averages) may or may not be worth your time. Whether you're trying to invest more confidently or fine-tune your entry points, this episode will give you a sharper lens for executing cash-secured put strategies like a pro. What You’ll Learn Why support lines are crucial for choosing put strikes—and how to spot them using multiple timeframes The difference between straight theta and aggregate theta—and how both affect decision-making How to evaluate weekend theta and avoid the trap of holding options through unnecessary decay Why volatility skew (vertical and horizontal) matters when selecting expirations and strikes How to think in terms of 7-day decay periods to uncover the best value across different expirations Why trading doesn’t have to be overcomplicated—and how to eliminate the noise from your charts Memorable Quotes “ Some of this is campfire knowledge... but a lot of it is what I’ve learned from trading for decades.” — Dan Passarelli “ Support and resistance have made it through thick and thin with me. I’ve divorced a lot of technical indicators, but I’m still married to support.” — John Kmiecik “It’s not just about the flat theta number—it’s about knowing what that number really means over time.” — John Kmiecik Resources & Extras Video Extra: Visual breakdown of straight vs. aggregate theta (available to premium subscribers) Characteristics and Risks of Standardized Options ( Options Disclosure Document ) Subscribe for bonus content at wealthbuildingwithoptions.substack.com Subscribe & Share Don’t miss future episodes—subscribe on your favorite podcast app. And if you found this episode helpful, share it with a fellow investor. The more we learn together, the more we grow.…
 
In this episode, Dan Passarelli dives deep into the strategy that many investors think they understand — but often get wrong: cash-secured puts. While most investors learn to sell puts early in their options journey, few truly master the nuance and mindset that separate solid trades from subtle mistakes. Dan unpacks the six core guidelines for executing high-quality CSPs, shares his personal evolution from skeptic to strategist, and reveals how most investors fall into the “time bomb strategy” trap — and how to avoid it. But that’s not all… He also takes us on a culinary detour through Icelandic puffin, Chinese chicken feet, and even donkey meat. It’s all part of the journey toward investing maturity — and yes, maybe building some collagen while we're at it. Later, frequent guest and coach John Kmiecik joins the conversation to challenge common myths, like the "sweet spot" of the 30 delta put and why most investors choose strikes that are too conservative — even when they say they want to be assigned. In This Episode: Why cash-secured puts aren’t as “simple” as they seem The six guidelines that will instantly improve your CSP trades Why objective is everything: Are you skating or trading? How investors sabotage themselves with backtesting myths The real risk of selling far OTM puts (it’s not what you think) How fundamentals like book value and tangible book value shape CSP decisions Why most new investors don’t really know if they want to be assigned A sneak peek into John’s technical approach for CSPs — coming in Episode 19 Key Insight: “Cash-secured puts are the meat and potatoes of options trading — but to get the flavor right, you need more than just the recipe. You need the right mindset, the right tools, and the right objectives.” Subscribe & Support: Like what you’re hearing? Help grow the Wealth Building with Options community: Share the show with investors who want more confidence and control in their strategy. Subscribe on your favorite podcast app so you never miss an episode. Support the podcast by joining Dan’s Substack — get video extras, trade breakdowns, and exclusive AMA access. Resources: Learn more about your host at MarketTaker.com Read: The Characteristics and Risks of Standardized Options PDF Next Time: Join us for Episode 19 where John returns to dig into technical analysis for cash-secured puts — and how it fits into a full-spectrum edge-based strategy.…
 
Dan Passarelli is joined by Jeffrey Hirsch, editor-in-chief of the Stock Trader’s Almanac , to talk seasonality, market cycles, and the powerful edge of timing your trades around historical patterns. From family legacy to tactical trade execution, Jeff breaks down how decades of research—plus some good old-fashioned intuition—can give traders a powerful boost. What You’ll Learn in This Episode: Why "Buy in October and get your portfolio sober" might be better advice than “Sell in May and go away” The most reliable fundamental metric for selecting value stocks How Jeff’s family legacy shaped the Stock Trader’s Almanac—and how he came to embrace it The surprising consistency of intraday trading patterns in a high-frequency world Using seasonality with options: When to sell puts and calls for maximum edge The power of the “best six months” and how to trade them with covered calls Seasonal volatility trends—especially around August through October Insights into election year cycles and how political shifts affect markets A personal side of Jeff Hirsch: music, Broadway, and producing a musical inspired by The Elephant Man Featured Guest: Jeffrey Hirsch Editor-in-Chief, Stock Trader’s Almanac Market historian, strategist, and student of behavioral finance Resources Mentioned: Stock Trader’s Almanac Learn more about Dan Passarelli and Market Taker Mentoring at MarketTaker.com Subscribe & Share: If you found this episode valuable, help us grow the Wealth Building With Options community: Subscribe on your favorite podcast app Share with a fellow trader Leave us a 5-star review to let others know this show helps real investors get real results…
 
Welcome back to Wealth Building with Options ! In this episode, we’re diving deep into a trader's secret weapon: the Trade Objective of the covered call strategy — specifically, using covered calls to strategically exit a stock position. If you’ve ever wondered: How do I get the most out of a stock I already own? What role does theta really play in my premium income? How do I avoid leaving money on the table — or getting assigned too early? …this episode is for you. Dan Passarelli breaks down the nuances of “trading out of a stock you own” through smart strike selection, theta analysis, and volatility evaluation — and shares how to do it with confidence, precision, and better returns. Here’s what you’ll learn: Why traders should treat their trading like a real business — not a side hustle The difference between the Skate Objective and the Trade Objective in covered calls How theta, volatility, and time to expiration impact the effectiveness of your trade The concept of aggregate theta and how to use it to compare expirations for maximum premium collection Why tight bid/ask spreads and avoiding earnings dates are critical to your setup The pros and cons of selling calls on stocks trading near all-time highs How to incorporate both technical resistance and dividend timing into your decision-making Special Guest: John Kmiecik Dan is joined by trader and educator John Kmiecik, who shares his practical perspective on using theta and premium analysis to fine-tune covered call trades. They dig into real examples, including John’s experience with Comcast shares, and discuss how sometimes the best trade is the one you don’t make . Listener Challenge: Think about a stock you own that you’d consider selling at a higher price. Would a covered call help you exit at that level while collecting cash along the way? What would make it worth it — and what wouldn’t? Resources & Mentions: Dan's Substack – https://wealthbuildingwithoptions.substack.com for video extras, trade breakdowns, and AMA access Episode 10 with Dr. Russell Rhoads Episode 13 with Steven Sears Subscribe now so you don’t miss Episode 17, featuring a very special guest and even more ways to take your option trading to the next level. Ready to treat your trading like a business? This is where you start. Disclaimer: Options involve risk and are not suitable for all investors. Read the Characteristics and Risks of Standardized Options before trading. https://www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdf To learn more about Dan Passarelli and Market Taker Mentoring, visit MarketTaker.com .…
 
In this deep-dive episode, Dan Passarelli lays out the OG Covered Call setup—the foundational approach to trading covered calls that every serious trader should understand. This episode is Part 1 of a two-part series that walks through the “Skate” Objective—a strategy focused on collecting premium while avoiding assignment. Dan brings together technical chart analysis, volatility evaluation, and decades of options expertise to show you how to set up covered calls with confidence and precision. Key Takeaways Why sell options only when volatility is overpriced — and how to determine when that is The importance of stock price and liquidity when choosing covered call candidates Avoid earnings events and other scheduled volatility shocks that can ruin setups The 10% Rule to minimize slippage and improve execution Using technical resistance to “skate” profitably without getting assigned Chart types explained (candles vs. bars vs. lines) and why candlesticks can give you an edge How to evaluate volatility using the “1-2-3 Volatility Analysis”: Tools & Concepts Covered Covered Calls vs. Cash-Secured Puts Option Chain Analysis Implied Volatility (IV) vs. Historical Volatility (HV) Resistance and Inflection Points Strike Proximity and “Wiggle Room” Using 6-month daily candle charts for timing and strike selection Join the Community Enjoying the podcast? Help grow the community: Share the podcast with other traders Subscribe in your favorite podcast app Leave a review to support the show Join the Wealth Building With Options Substack at https://wealthbuildingwithoptions.substack.com Disclaimer Options involve risk and are not suitable for all investors. Please read the Characteristics and Risks of Standardized Options before trading. https://www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdf…
 
Episode Summary: In this episode, Dan dives into one of the most misunderstood aspects of options trading: the Greeks — and more importantly, where the real edge in trading actually comes from. Contrary to what many novice traders believe, theta is not the edge. The real advantage lies in volatility and skew. With practical examples and 30 years of trading experience, Dan breaks down how delta works, why traders often misinterpret theta, and how cash-secured puts and covered calls use volatility pricing to your advantage. In This Episode, You’ll Learn: Why theta is not a reliable trading edge, despite popular belief How delta works in directional trading and how to simplify its meaning The true nature of short puts and why they behave like bullish stock positions How risk premium gives option sellers an advantage Why options behave like insurance policies — and how that helps traders What volatility skew is and how to recognize it How covered calls and cash-secured puts benefit from implied volatility mispricing Key Concept: Delta isn’t just a Greek — it’s the sensitivity of an option’s price relative to the underlying stock. When you understand how delta mirrors share ownership, your perspective on options changes completely. And when you understand skew, you start trading with a real edge. Additional Resources: To access bonus video content, trade adjustments, and subscriber-only episodes, visit: wealthbuildingwithoptions.substack.com Support the Show: Share this podcast with fellow traders and subscribe to your favorite app so you don’t miss the next episode. A quick review or rating helps the show grow and reach more traders like you. Disclaimer: Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before investing. Link: https://www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdf…
 
Episode 13 – The Golden Age of Options: A Conversation with Steven Sears In this episode of Wealth Building With Options , Dan Passarelli sits down with one of the most influential voices in the options world—Steven Sears. A former senior editor at Barron’s , senior advisor to the Philadelphia Stock Exchange, and a key figure in the rise of electronic options trading, Sears brings decades of front-line experience and deep insight into how options can transform a portfolio. In this wide-ranging and insightful conversation, you’ll discover: Why we’re entering a “golden age” for options—and what it means for everyday investors The power of compounding through covered calls and cash-secured puts How top professionals select stocks to complement options strategies Why managing volatility is more essential than ever in today’s market The shift from speculative trading to disciplined, process-based investing What most investors misunderstand about selling options—and how to fix it The mindset that separates consistent winners from everyone else Whether you're new to options or looking to sharpen your edge, this episode will challenge your assumptions, reframe your strategy, and inspire confidence in a smarter, steadier approach to building wealth. Listen now and hear how Steven Sears sees the evolving landscape—and how you can thrive in it. For more information about Dan Passarelli join him on Substack at https://wealthbuildingwithoptions.substack.com Options Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, you must receive a copy of Characteristics and Risks of Standardized Options , also known as the options disclosure document (ODD). It is available at https://www.theocc.com/Company-Information/Documents-and-Archives/Options-Disclosure-Document.…
 
Episode Summary: In this episode, Dan Passarelli breaks down a powerful trading concept: using cash-secured puts as a smarter, more strategic version of limit orders. If you've ever hesitated about assignment or second-guessed a put trade, this episode is for you. Dan shares real-world stories (including a Vegas twist involving a mastermind event that… wasn’t) and psychological lessons from 7,000+ trading days. He explains why assignment shouldn’t be feared, how premium collection changes the math on your trade entries, and how traders often let emotion sabotage what could be great opportunities. Later, Dan welcomes back John Kmiecik, a trading coach who’s worked with hundreds (maybe thousands!) of students on mastering this mindset. Together, they explore: Why traders often fear assignment more than they should How selling puts is like getting paid to place a limit order Real trading examples from John (including his recent strategy with Comcast) The psychological traps that can derail traders — and how to avoid them Tactical advice for identifying price levels where you're truly comfortable owning stock Key Takeaways: Assignment isn’t failure — it's part of the plan when using puts to enter stock positions. Cash-secured puts can lower your effective purchase price, even without assignment. Psychology is everything. Fear, regret, and hesitation often cost more than any bad trade. A put that doesn’t get assigned? You still keep the premium. That’s the hidden win. Planning your response before you enter a trade is the key to long-term consistency. Next Steps: Subscribe to Dan’s Substack, https://wealthbuildingwithoptions.substack.com for Video Extras, trade recaps, and monthly AMA sessions. To work with Dan and John you can connect with them at Markettaker.com Options involve risk and may not be suitable for all investors. Read Characteristics and Risks of Standardized Options before investing. https://www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdf…
 
In this episode, Dan dives into a powerful but often misunderstood options strategy: the cash-secured put. Often considered the sibling of the covered call, this strategy blends the best of investing discipline with the premium-collecting power of options trading. What You’ll Learn: Why Dan used to hate cash-secured puts—and what changed his mind How selling puts can feel like setting a “limit order with benefits” The psychology behind financial freedom and higher-frequency trading The critical difference between trading and investing mindsets When assignment is part of the plan (and how to make that work for you) Key mechanics of the trade: risk, reward, and break-even calculations Real-life example: selling puts on WXYZ (Wanda’s Extra Yarn & Zippers Inc.) Why many traders stress less with cash-secured puts than with covered calls Special Segment: Dan brings on options coach John Kmiecik to talk about: How traders use cash-secured puts in one-on-one coaching sessions Why this strategy might be less stressful than covered calls How to manage trades if you don’t want to be assigned The role of sizing, account value, and portfolio allocation when using this strategy Common pitfalls like averaging down without a plan Bonus for Subscribers: Paid subscribers get access to: Video extras that break down P&L diagrams for cash-secured puts Real trade examples from Dan’s IRA Monthly Ask Me Anything sessions and more Subscribe on Substack at: wealthbuildingwithoptions.substack.com Key Quote: “Cash-secured puts aren’t just trades — they’re a mindset shift. They’re how investors say, ‘I’ll buy the stock… but only at my price.’” Before Investing in Options download Characteristics and Risks of Standardized Options https://www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdf…
 
Episode Summary: In this special episode, Dan Passarelli is joined by longtime friend and options expert Russell Rhoads—Associate Clinical Professor at Indiana University, former CBOE educator, and seasoned trader. They dive deep into real-world options education, covering everything from teaching college students about derivatives to building structured outcomes with options. Topics Covered: Why concepts matter more than complex math when teaching options Covered calls and cash-secured puts as strategic investing tools How to use implied volatility (IV) and the at-the-money straddle for strike selection Surprising insights from Russell’s backtest on covered call strategies during earnings weeks The evolving perception of options in retail vs. institutional circles Understanding the VIX term structure and what today’s flat curve might be signaling How to “become the issuer” of your own structured product using options Why selling options—especially in calm markets—can give you the edge Tips for navigating earnings season with confidence Key Takeaways: A consistent covered call strategy can outperform buy-and-hold—especially if you exit during earnings weeks The at-the-money straddle is a powerful, underused tool for estimating expected moves and timing trades Retail traders can learn to structure their own risk and reward profiles, just like institutional structured products The VIX futures term structure reveals market uncertainty—and today's unusual flat curve might be a red flag Guest Bio: Russell Rhoads is an experienced options educator, researcher, and practitioner. He teaches at Indiana University’s Kelley School of Business and consults with financial exchanges. Previously, he was the Director of Education at the CBOE’s Options Institute. Resources Mentioned: Learn more about Dan: MarketTaker.com For options disclosures: Characteristics and Risks of Standardized Options (PDF)www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdf Subscribe & Review: Don’t miss the next episode, “Cash-Secured Puts: The Brother from Another Mother” – Subscribe now and leave a review to help grow the Wealth Building With Options community!…
 
Welcome back, Wealth Builders! In this episode, Dan Passarelli takes a deep dive into why covered calls continue to outperform the market over time— but only when done right . If you've ever wondered what gives covered calls their edge, this is your episode. Key Topics Covered The Truth Behind Covered Calls: Why the strategy works statistically—but why most investors still fail with it. The Option Greeks Breakdown: Delta (directional sensitivity) Theta (time decay) Vega (volatility sensitivity) The Hidden Edge: Risk Premium: How options have historically been overpriced since the 1987 crash, and how sellers can benefit. Volatility & Market Inefficiency: A critique of the Efficient Market Hypothesis and what it means for options traders. Why Repetition Matters: The compounding edge of consistently selling covered calls over time. Guest Interview: Henry Schwartz, VP of Market Intelligence at Cboe Global Markets, shares expert insights into the structural reasons options tend to be overpriced and how sellers can harness that edge. “The price one can sell an option for is greater than the value it adds. That’s the whole magic of covered calls.” – Dan Passarelli Free Gift: Covered Call Strategy Guide Leave a review on Apple Podcasts, Spotify, or wherever you listen. Then: Take a screenshot of the review. Post it to our Substack or on social media. Use the hashtag #WBWO. And we’ll send you Dan’s Covered Call Strategy Guide for free! Mentioned in This Episode Dan’s book: Trading Option Greeks Black-Scholes Model origins Ken Griffin’s early arbitrage trades at Harvard University of Chicago’s Efficient Market Theory CBOE Global Markets and options data insights - https://go.cboe.com/l/77532/2025-02-13/flrl76/77532/1739470545lScFNDr9/State_of_Industry_January_2025_NEW.pdf Tools for Traders Learn more about Dan at MarketTaker.com Subscribe to our Substack Newsletter https://wealthbuildingwithoptions.substack.com Follow Dan on social media Instagram- https://www.instagram.com/markettakermentoring/ YouTube- https://youtube.com/markettakermentoring Twitter- https://twitter.com/Dan_Passarelli Facebook- https://www.facebook.com/markettaker Don't miss Episode 10 with a very special surprise guest—someone with game-changing insight into options trading that you won’t want to miss. Until then... Invest excellently.…
 
Episode Summary: In this eye-opening episode, Dan Passarelli challenges the common misconceptions surrounding covered calls. While most traders focus on “why” covered calls work, Dan flips the script and digs into the false narratives and misguided logic that lead investors astray. Dan explains why some of the most popular justifications for trading covered calls are intellectually lazy—and how overlooking key factors like option pricing models and probability curves can lead to missed opportunities or unnecessary losses. This episode lays the foundation for next week’s deeper dive into the true reason covered calls work. Key Takeaways: You’ve been misled: Many reasons given for why covered calls "work" are based on flawed logic, not solid data. Probability ≠ Profit: High-probability trades don’t always equal good trades—context and pricing matter. The 3 flawed logics covered call traders often fall into: The premium isn’t worth the risk. Assignment means “losing money.” Covered calls always add value, so trade them blindly. What really matters: Understanding the options pricing model, probability curves, and the indifference point. Analogy alert: Dan compares covered calls to buying a car—price must reflect value or the deal isn’t worth it. Guest Insight: Henry Schwartz of Cboe Global Markets joins to share data-backed insights into how buy-write strategies are used and who’s trading them. Featured Concepts: Log-normal distribution curves and probability modeling Indifference point explained with a $119/$122 call example Options pricing mechanics: volatility, time, interest rates How pricing impacts strategy effectiveness Special Offer: Leave a review for the podcast on Apple Podcasts, Spotify, or your preferred platform. Then screenshot your review and post it to our Substack or social media with the hashtag #WBWO. We’ll send you Dan’s Covered Call Strategy Guide PDF—free. Resources Mentioned: Wealth Building With Options on SubStack- https://wealthbuildingwithoptions.substack.com/ MarketTaker.com – Learn more about Dan Passarelli and his work https://www.theocc.com/getmedia/a151a9ae-d784-4a15-bdeb-23a029f50b70/riskstoc.pdf ) Connect with Henry Schwartz and Cboe Global Markets at cboe.com…
 
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