Ep9 - Effing Around and Finding Out Why Covered Calls Work

Wealth Building With Options

Welcome back, Wealth Builders! In this episode, Dan Passarelli takes a deep dive into why covered calls continue to outperform the market over time—but only when done right. If you've ever wondered what gives covered calls their edge, this is your episode.

Key Topics Covered

• The Truth Behind Covered Calls: Why the strategy works statistically—but why most investors still fail with it.
  
• The Option Greeks Breakdown:
  
  • Delta (directional sensitivity)
    
  • Theta (time decay)
    
  • Vega (volatility sensitivity)
    
• The Hidden Edge: Risk Premium: How options have historically been overpriced since the 1987 crash, and how sellers can benefit.
  
• Volatility & Market Inefficiency: A critique of the Efficient Market Hypothesis and what it means for options traders.
  
• Why Repetition Matters: The compounding edge of consistently selling covered calls over time.
  
• Guest Interview: Henry Schwartz, VP of Market Intelligence at Cboe Global Markets, shares expert insights into the structural reasons options tend to be overpriced and how sellers can harness that edge.

“The price one can sell an option for is greater than the value it adds. That’s the whole magic of covered calls.” – Dan Passarelli

Free Gift: Covered Call Strategy Guide

Leave a review on Apple Podcasts, Spotify, or wherever you listen.
Then:

1. Take a screenshot of the review.
   
2. Post it to our Substack or on social media.
   
3. Use the hashtag #WBWO.
   

And we’ll send you Dan’s Covered Call Strategy Guide for free!

Mentioned in This Episode

• Dan’s book: Trading Option Greeks
  
• Black-Scholes Model origins
  
• Ken Griffin’s early arbitrage trades at Harvard
  
• University of Chicago’s Efficient Market Theory
  
• CBOE Global Markets and options data insights - https://go.cboe.com/l/77532/2025-02-13/flrl76/77532/1739470545lScFNDr9/State_of_Industry_January_2025_NEW.pdf

Tools for Traders

• Learn more about Dan at MarketTaker.com
  
• Subscribe to our Substack Newsletter https://wealthbuildingwithoptions.substack.com
  
• Follow Dan on social media
  • Instagram-https://www.instagram.com/markettakermentoring/
  • YouTube-https://youtube.com/markettakermentoring
  • Twitter-https://twitter.com/Dan_Passarelli
  • Facebook- https://www.facebook.com/markettaker

Don't miss Episode 10 with a very special surprise guest—someone with game-changing insight into options trading that you won’t want to miss.

Until then...
Invest excellently.

Disclosure:

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document

Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.

Trumpet
Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0

Wah Wah Wah

Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0