The most common question after “what is a covered call?” is “which strike should I pick?” The answer depends on one thing: how much assignment risk you're comfortable with.
Assignment risk is controlled by delta — a number between 0 and 1 that roughly equals the probability the option finishes in-the-money. Lower delta = safer. Higher delta = more income. Every covered call strategy is a point on this spectrum.
Conservative
Delta: 0.15–0.20Keep Shares
80–85%
Monthly (est.)
$150–$250
Annualized
6–10%
Best for:
Investors who love their stocks and want steady, low-risk income without disrupting their portfolio.
Example
AAPL at $230. You sell the $245 call (delta 0.17) for $2.10. You collect $210 and have an 83% chance of keeping your shares. If assigned, you sell at $245 — a $15/share profit plus the $210.
The tradeoff: Less income per month. You might earn $200 when an aggressive seller earns $500. But you almost never get assigned, so your portfolio stays intact month after month.
Moderate
Delta: 0.25–0.35Keep Shares
65–75%
Monthly (est.)
$300–$500
Annualized
12–20%
Best for:
Most covered call sellers. A balanced approach that generates meaningful income while maintaining a reasonable chance of keeping shares.
Example
AAPL at $230. You sell the $237.50 call (delta 0.30) for $4.20. You collect $420 and have a 70% chance of keeping your shares. If assigned, you sell at $237.50 — a $7.50/share profit plus the $420.
The tradeoff: The Goldilocks zone. Enough premium to feel worth the effort, with good odds of retaining shares. About 1 in 4 months, you'll get assigned — but you sell at a profit.
Aggressive
Delta: 0.40–0.50Keep Shares
50–60%
Monthly (est.)
$500–$800
Annualized
20–35%
Best for:
Income-focused sellers who don't mind selling their shares at a profit. Best for stocks you're neutral on or willing to part with.
Example
AAPL at $230. You sell the $232.50 call (delta 0.45) for $6.80. You collect $680 and have about a 55% chance of keeping your shares. If assigned, you sell at $232.50 — a small stock gain plus the $680.
The tradeoff: Maximum income, but you'll get assigned roughly half the time. If you love the stock and don't want to sell, this isn't for you. If you're okay selling at a profit and rebuying later, it's very profitable.
How do I decide which strategy is right for me?
Ask yourself three questions:
- Do I want to keep this stock long-term? If yes, lean conservative. The premium will be smaller, but you almost never lose your shares.
- Am I comfortable selling at the strike price? If you'd be happy selling AAPL at $240, then selling the $240 call is a win regardless of assignment. Our guide on how to pick strike prices walks through this in detail.
- What's my outlook on this stock over the next month? If you think it'll stay flat or drift slightly higher, moderate works well. If you think it could rally hard, go conservative to avoid missing the move.
ThetaScout's recommendation for beginners
Start with Conservative for your first 3–5 trades. The goal is to get comfortable with the mechanics — not to maximize income on day one. Once you've seen a few expirations cycle through and understand how assignment works, consider moving to Moderate for the income boost. When it's time to close or roll a position, see our exit strategies guide.