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  • Using the Mid-Contract Unwind Exit Strategy to Achieve an 8.4%, 25-Day Return – December 29, 2025

    Dec 29, 2025 Uncategorized Comments Off on Using the Mid-Contract Unwind Exit Strategy to Achieve an 8.4%, 25-Day Return – December 29, 2025

    It is not uncommon to attain greater than maximum returns when implementing our covered call writing exit strategies. In this article, a series of trades will be analyzed where the mid-contract unwind (MCU) exit strategy was employed to perfection. The stocks used in this 25-day series of trades were SoFi Technologies, Inc. (Nasdaq: SOFI) and ACM Research Inc. (Nasdaq: ACMR).

    What is the mid-contract unwind exit strategy for covered call writing?

    Both legs of the trade are closed and the cash generated from the sale of the shares is used to craft a second covered call trade during the same expiration cycle with a different underlying security. This means, we are creating a second income stream. When share price rises exponentially, we have maximized our initial trade returns and now can create yet another cash flow.

    Real-life trades with SOFI & ACMR shared by Jim

    • 6/24/2025: Buy 500 x SOFI at $15.74
    • 6/24/2025: STO 5 x 7/18/2025 $16.00 calls at $0.76
    • 7/9/2025: BTC 5 x 7/18/2025 $16.00 calls at $4.10 (as SOFI shares move up to $20.00)
    • 7/9/2025: Sell 500 x SOFI at $20.00 (this closes the initial trade)
    • 7/9/2025: Buy 500 x ACMR at $29.00
    • 7/9/2025: STO 5 x 7/18/2025 $30.00 calls at $0.52
    • 7/18/2025: 500 shares of ACMR sold at $30.00 by “allowing” exercise of a slightly ITM call strike

    Calculating all trades, start-to-finish, Using the BCI Trade Management Calculator (TMC)

    • Per-share gain on SOFI = $4.26 ($20.00 – $15.74)
    • Per-share loss on SOFI options = $3.34 ($4.10 – $0.76)
    • Per-share gain on ACMR shares = $1.00 ($30.00 – $29.00)
    • Per-share gain on ACMR options = $0.52
    • Realized cash profit on SOFI trades = $460.00
    • Realized cash profit on ACMR trades = $760.00
    • Combined 25-day realized cash profit = $1220.00
    • Cost-basis = maximum investment = $14,500.00 (cost of ACMR shares)
    • Final 25-day realized return = 8.4% ($1220.00/$14,500.00)

    Discussion

    After entering our covered call trades, we immediately prepare for potential exit strategy opportunities. In these trades with SOFI & ACMR, Jim did just that and converted a 6.48% maximum return to a final 8.40% realized return. Nice going, Jim.

    Author: Alan Ellman

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