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Monthly covered calls: the steady version, and what it gives up

A monthly covered call expires about 30 to 45 days out. You sell it once, manage it maybe once, and move on. It pays less decay per day than a weekly, but it asks far less of you. Here's what the steady version gives you, and what it gives up.

Options guide · 7-minute read · Updated 2026-10-26

What "monthly" means here

Two things, and both are fine:

• The standard Monthly options, which expire on the third Friday of each month. Every optionable stock has them. They tend to have the most Open interest and the tightest spreads.
• Any expiry 30 to 45 days out, which might be a monthly or a weekly date that happens to land there.

Either way, the rhythm is the same: one call, one month. That's the default rhythm in the wheel strategy and the one we'd start with. See which expiry to pick for the reasoning.

What you get

Fewer decisions. About ten to twelve a year instead of fifty-two. Each one gets more attention: the earnings check, the dividend check, the chart.

Less spread paid. You cross the bid-ask gap once a month. On a $1.00 call with a $0.05 spread, that's about $5 per contract, paid once per call. The weekly seller crosses it four or five times.

Room to be wrong. With three weeks left, a stock that jumps past your strike can come back. You can roll, close, or wait. With two days left, the move hits the call almost one-for-one.

The fast part of the decay, held through. Selling at 35 days means the last two weeks of melt, the steep part, happen while you're short the call. See theta decay explained.

What you give up

Precision. An earnings date on day 20 of a 35-day call means you're in the trade through it, or you close early. A weekly seller would just skip that week.

The ability to re-strike quickly. If the stock rises $3 in week one, your $55 call is now a worse strike for the next four weeks. The weekly seller re-picks on Friday.

A little total premium. Four weeklies often collect somewhat more than one monthly, if every one of them goes smoothly. See weekly covered calls for the honest version of that comparison.

A worked example, one month start to finish (an illustration, not a trade idea)

You own 100 shares of a made-up stock, XYZ, at $50. On the Monday after the March expiry, you sell the April $55 call, 33 days out, for $1.00. You collect $100. Earnings are in May, outside the window. No dividend inside it.

That's a quiet month: one decision at the start, one order that ran itself. Or the month goes the other way:

The steady version didn't make the month steady. The stock fell $9 and the call offset $1 of it. The weekly seller in the same month would have collected $0.30 four times and lost $780 instead of $800. Neither expiry is the point when a stock falls like this; the share decision is. See covered call when the stock drops.

The monthly routine, written down

1. Expiry weekend: note what happened. Called away, expired, or closed early.
2. Monday: check the next earnings date and ex-dividend date. If either is inside the next 35 days, pick the expiry after it, or skip the month.
3. Pick the strike at or above where you'd sell. Note the bid.
4. Sell one call. Set a buy-to-close order at half the premium, good till cancelled.
5. Check once a week. If the stock has moved a lot, revisit your exit rules. Otherwise, leave it.

Five steps, one page in a notebook. That's the whole appeal.

Who monthlies suit

• Anyone who'd rather not look at the account every day.
• Stocks and ETFs whose monthly strikes have the most volume.
• Beginners making their first few trades. See your first covered call.
• People who've noticed that more decisions means more mistakes.

If you later find you want finer control around dates, weeklies are there. Most people find the opposite: that fewer decisions was the feature.

Questions