Managing Trades When Strikes Expire Both In-The-Money & Out-Of-The-Money for the Same Stock – May 11, 2026
In previous publications, laddering covered call strikes with the same expiration dates was discussed. This article will address scenarios when the ITM strikes remain ITM and the OTM strikes remain OTM at expiration. A real-life example with Alamos Gold Inc. (NYSE: AGI) will be analyzed.
AGI 5-day trade
- 12/15/2025: Buy 400 x AGI at $38.08
- 12/15/2025: STO 1 x $40.00 OTM call at $0.20
- 12/15/2025: STO 3 x $37.00 ITM calls at $1.45
- Pre-stated initial weekly time-value return goal range is 1/2% to 1% for both ITM & OTM strikes
Initial Covered Call Trade Calculations: BCI Trade Management Calculator (TMC)
- Red oval: 5-day trade
- Yellow field: Breakeven price points
- Brown cells: Initial time-value returns for the OTM $40.00 strike
- Purple cell: Additional upside potential for the OTM call strike (potential 2nd income stream from share appreciation)
- Pink cells: Initial time-value returns for the ITM $37.00 strike
- Blue cell: Downside protection of the ITM time-value return
Trade status after Expiration on 12/19/2025
- AGI closed at $38.48
- This is $0.40 above the price at trade entry
- I allowed the 300 shares to be exercised at $37.00 for a net gain of $111.00
- I am holding 100 shares at an unrealized gain of $40.00 and an option realized gain of $20.00
- Total 5-day realized + unrealized gain = $171.00 = 82% annualized
Discussion
Just as we have the opportunity to use different strikes for the same underlying security with the same expiration dates, we also have the flexibility to allow or prevent exercise and assignment of our shares. I could have bought back and rolled the ITM strike prior to expiration but decided to allow exercise and retain the remaining 100 shares to then write a covered call the following week. In essence, I had 4 successful contract trades and took some money off the table for the next contract cycle.