Selling covered calls. I am interested in selling covered calls for the Russell 2000.

[3Hotdogs]

It will cost about 250k for a share in the fund. I would sell the calls that expire every two days, two or three times per week.

The fund is not exceptionally volatile. Which is why I choose this. A 10 point gain on 100 shares would result in a gain of $1,000. I would sell calls that are 5 or 10 points out. If they are "called," I would buy to close so as to not pay a tax on the profit. I would make less money than if the option is not called.

If the fund declines in value, which it certainly will at some point, I will sell the next expiration date but at a lower strike price, with the intention of keeping the shares.

Thoughts?

[A HERETIC I AM]

1. You said a single share in the "fund" is $250K

What is the ticker of this fund?

$250,000 seems like a significant amount to tie up in one security unless your portfolio is large.

[3Hotdogs]

2. Symbol is RUT. Google Russe3ll 2000 option chain.

It is an accumulation of 2000 small cap stocks. Similar in style to the S & P 500.

[A HERETIC I AM]

3. OK, we were talking past each other.

I am well aware what the Russell 2000 is. It's an index. As you point out, like the S&P 500.

But you used the word "Fund" which indicated to me you were trading an exchange traded fund, not an option chain on the index itself. That’s why I asked what the ticker was.

Best of luck and may all your trades be net gains.

[3Hotdogs]

4. I used the term, fund, rather than index, in the hope of getting more people to respond.

[truddy777]

5. .

Selling short-dated calls on something not too volatile usually means steady premiums without crazy swings. Only thing I’d watch is the buy-to-close part - you might eat into your gains if you’re closing too often. Some folks are fine just letting shares get called and then rebuying if they still like the fund.

[3Hotdogs]

6. Thx. I have been rethinking this. Maybe better with S & P covered calls.

Selling 2 to 3 days out, at about 3 points out, I shouldn't get called out too often. Tax wise, I think would be better to buy to close than to get called out and rebuy.

[nilram]

7. Are you doing this?

(Whether on RUT, SPX or something else?)

I just noticed your posting and thought I'd ask even though it's a few months old. I ran some numbers and it looks interesting.

I was going to suggest using IWM, so you could try things out on a smaller scale and to get experience with the strategy and how the index moves, but same effect if you're using SPX. I also see that RUT options are "cash settled." Not sure how that works if they're called away.

[3Hotdogs]

8. I haven't started. Money to invest will be available in a month or so.

I thought I would have access a couple of months ago.

I am more secure with this as I continue paper trading with it. Looks like it will be the S & P.

On the S & P, I would assume a projected gain of $100 per year,,pershare. I would project a gain of $5 per share, bimonthly and sell $5 above the current price. That way, I wouldn't be driving myself crazy, making sure I don't get called out, every two days.. Of course, there are times I would be called out. And there are times when - well we're overdue for the 10 year market price drop.

A I Bubble, anyone?

I hope I'm explaining this clearly. It's late and I'm tired from driving the grandkids home from a weekend with us. --- Tired, but worth it.3H

[nilram]

9. Cool. Are you paper trading online,

Last edited Tue Oct 21, 2025, 07:51 PM - Edit history (1)

or in a spreadsheet? A lot of brokerages offer paper-trading accounts and I think that would be more accurate. I'm going to give this a try.

And, yeah, we're due for a correction. I wonder if there's a way to simulate this scenario using only options -- buy puts and sell the calls against them? Sell naked calls? Might increase your expense, but reduce risk against a correction.

I'm pretty simple minded (buying/selling calls; sold my first put recently). I've read about various strategies, but your post inspires me to look a little deeper.