Assignment of the Week · Puzzle #6
Would you take this assignment? #6: Called away on a rocket
The scenario
- Basis $48.80
- Sold $52 covered call for $0.90
- Stock rips to $60, shares called away
Basis $48.80. You sold a $52 covered call for $0.90. The stock rips to $60 and your shares are called away. What did you make, and what did you give up?
Work it out first (the wheel calculator helps), then open the answer.
Show the answer and the math
Short answer: Made $410 (8.4% on basis). Gave up $800 of upside above $52.
Worked math
- Profit when called: ($52 − $48.80 + $0.90) × 100 = $410.
- Return on basis: $410 ÷ $4,880 = 8.4%.
- Upside given up: ($60 − $52) × 100 = $800 above the strike.
- Same shares, no call: Holding the same shares with a $48.80 basis to $60 would show ($60 − $48.80) × 100 = $1,120, vs your $410.
The takeaway
This is the wheel's built-in trade-off: steady premium in exchange for capped upside. Getting called away at a profit is a win, not a mistake. The cycle restarts with a new put. If you'd be upset missing a run like this, choose calls further out of the money or wheel a different stock.
Run your own numbers, then read the full cycle
Plug any put or call into the free, no-signup wheel calculator to see return on capital, annualized return and breakeven side by side.
The whole cycle (cash-secured put, assignment, covered call, and what to do when it goes wrong) is laid out step by step in Spin the Wheel, Cash the Checks by Logan Sterling (Kindle, $6.99, or free on Kindle Unlimited).
Hypothetical numbers for teaching, not a trade recommendation. Educational only, not financial advice. Options involve risk. Selling options can result in substantial losses, and no particular result or income is guaranteed. See the full disclaimer.