The Rules for Selling Calls on Existing Stock Holdings

As presented by Hooper and Zalewski in their book Covered Calls and Leaps, here are the rules for selling calls on existing stock holdings.

1. New calls may only be sold on up market days.
2. If the market price of the stock is higher than your cost in the stock, both the called and uncalled return calculations should be based on the current market price of the stock. If the current market price of the stock is lower than you cost in the stock, all return calculations should be based on your cost in the stock.
3. If you have no desire to keep the stock, your objective should be to sell a near month call that will provide a satisfactory uncalled and called return. If you can sell a near month call with a resulting uncalled and called return minimum of 2%, then do so.
4. If you cannot satisfy rule 3 or you do not want to be called out of the stock holding, then use the TSS for income while being sure to adhere to the selling high rule.