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This one stings a little.
You sell a covered call. The stock pushes higher. Then it really pushes higher. Now it’s blowing past your strike — by a lot — and you’re sitting there watching dollars pile up that you’re never going to touch. It’s frustrating. I’ll be the first to admit it.
But here’s what you need to understand: Buying back that call to chase it is almost always a terrible idea.
The Math That Keeps Me Honest
Let’s say you sold a $26-strike call for $1.10. Now the stock’s at $50 and you’re thinking about rolling it up to grab more upside.
Here’s the problem: That $26 call you sold for $1.10 is now worth around $24. You’d be taking something like a 24,000% loss just to buy it back so you could resell a higher-strike call. That’s not strategic — that’s emotional.
So what do you do instead? You let the stock get called away at your strike, even if it’s at $50, and you move on to the next trade. You can cry about it a little — I’ll give you permission — but normally there’s no crying in trading.
Yeah, I’ve Been There Too
I’m not immune to this.
I sold $91-strike calls on AST SpaceMobile (ASTS), and the stock ran to $105. That’s not fun. That doesn’t make Jack a happy trader.
Honestly, you see the problem — I’m never happy. That’s part of the mental game. You can cry a little bit, but don’t let anyone see you. And remember, you’re still in the trade, you’re still collecting premium and you’re still working the wheel.
That’s called having a plan and sticking to it.
Then ASTS dropped all the way back to $89, and suddenly I was wishing I had been called out at $91. You see how that works?
The mind is the real battlefield.
Even when you feel like you bungled it and left a ton of money on the table, the reality is this — we still made great money. This happened to me with Vertiv Holdings (VRT) badly — I got stuck on a call way out of the money. It happened with ASTS. It’ll probably happen again.
But that’s part of the game. You’ve got to control your mind. Emotional decisions are always the most expensive ones. Even when a trade looks like it ran away from you, you’re still generating income, still lowering cost basis and still following a repeatable process. That’s the whole point of the wheel.
So yeah — let it sting for a minute. Then move on, because the next setup is always in front of you.
Trade well,
Jack Carter
Jack Carter Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. This Trading Approach Goes Against Everything You Know
Lean closer…
What you’re about to see goes against everything you’ve been taught about options — flipping traditional wisdom upside down.
Here’s what’s actually incredible. This setup is built for the exact kind of volatility we’re seeing in today’s market.
Here’s what’s actually incredible. This setup is built for the exact kind of volatility we’re seeing in today’s market.
It’s already weathered some of the market’s most volatile storms in the past, and I’m trusting it to take us through these fresh yet chaotic waters.
I can’t make absolute trading guarantees, of course.
But if you’d like to see how I plan to go after the market armed with this unconventional setup — and even tag along if you choose…
