Fischer analyzes two defined-risk strategies: the covered put and the covered call. Both collect option premium as income while maintaining a hedged position in the underlying stock.
A two-leg position that profits when the underlying stock declines or stays below a defined breakeven. You collect premium by selling a put option while holding a short position in the stock.
Sell shares of the underlying short. This establishes your directional position and provides the "cover" for the put you sell. Your broker holds the short position as collateral.
Simultaneously sell an out-of-the-money put at a strike below the current price. You collect premium immediately. This is theta income — time decay working in your favor every day.
The put is assigned — you buy shares at the strike to close your short. You profit from the decline plus you keep the full premium. Max profit = premium + (entry − strike) × shares.
The put expires worthless and you keep the premium. Your short stock position loses, but the premium collected shifts your breakeven higher, reducing loss. Risk is defined and quantified at entry.
Profit is capped at max profit when stock falls below strike. Loss increases as stock rises above breakeven.
The mirror image of a covered put. You own the stock long and sell a call option above the current price. Premium collected provides income and lowers your effective cost basis.
Purchase shares of the underlying. This is your long position and provides the "cover" for the call you sell. You benefit from any price appreciation up to the strike.
Sell an out-of-the-money call at a strike above the current price. You collect premium immediately. If the stock stays below the strike, the option expires and you keep both the shares and the premium.
The call is assigned — you sell shares at the strike. You profit from the appreciation plus you keep the full premium. Max profit = premium + (strike − entry) × shares.
The call expires worthless and you keep the premium. Your long stock position loses, but the premium collected shifts your breakeven lower. The premium cushion reduces your effective cost basis.
Profit is capped at max profit when stock rises to strike. Loss increases as stock falls below breakeven.
| Covered Put | Covered Call | |
|---|---|---|
| Stock Position | Short shares | Long shares |
| Option Sold | Put (below spot) | Call (above spot) |
| Profits When | Stock falls or stays flat | Stock rises or stays flat |
| Max Profit | Premium + (entry − strike) × shares | Premium + (strike − entry) × shares |
| Risk | Stock rises sharply above breakeven | Stock falls sharply below breakeven |
| Breakeven | Entry + premium per share | Entry − premium per share |
| Income Source | Theta decay on sold put | Theta decay on sold call |
| Ideal DTE Range | 0–14 days | 0–14 days |
Time decay is non-linear. An option loses more value per day as it approaches expiration. Short-dated options deliver the highest theta-per-day of risk exposure.
Illustrative figures for a typical $500K notional position. Actual values vary by underlying, implied volatility, and moneyness.
Short-dated positions expire in days, not weeks. Capital is recycled quickly, allowing more frequent deployment across opportunities as market conditions change.
A 3-day position has less exposure to overnight gaps, earnings surprises, and macro events than a 30-day position. The shorter the duration, the more predictable the outcome.
Every position Fischer identifies includes a computed probability of profit derived from Black-Scholes. You see the exact likelihood of a profitable outcome before committing capital. Fischer scans 15 underlyings across 7 strikes each, evaluating over 600 combinations to surface the positions where the mathematics favor the seller.
View actual scan reports and drilldown analyses, or learn how the quantitative engine selects positions.
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