One of the most compelling advantages of systematic option income strategies is the ability to generate returns without constant monitoring. While many active traders struggle to step away from their screens even briefly, option sellers using extended-duration contracts can establish positions that continue working while they focus on other priorities—including vacation.
This article demonstrates exactly that scenario. After returning from nearly a month away, one trader discovered their BITO options positions had generated a 2.7% return without requiring any adjustments or active management during that entire period. The position consisted of covered calls and cash-secured puts with 3-4 week expirations, specifically designed to minimize monitoring requirements while continuing to collect premium income.
You'll learn the complete workflow for managing positions that were set before vacation and expired during absence, including how to properly record cash-secured put assignments, track accumulated cost basis across multiple assignments, select new strikes after a position has grown substantially, and transition back to more frequent expiration cycles when time permits more active management.
The first task after returning from an extended absence is understanding exactly what transpired with the options positions that were established before leaving. This requires reviewing both the broker's account statement and comparing the current position to what was expected based on pre-vacation planning.
Opening the paper trading account reveals the position has grown to 700 shares of BITO, up from the 600 shares owned before vacation. This increase indicates that a cash-secured put expired in the money and was assigned, adding 100 shares to the position as planned.
The stock price currently sits at $24.00, which is significantly below the $28.50 strike price of the cash-secured put that was sold before vacation. This price relationship explains why assignment occurred—when a put expires with the stock below the strike price, the put holder exercises their right to sell shares at the higher strike price, obligating the put seller to purchase those shares.
The covered call position sold before vacation had a $29 strike price. With the stock currently trading at $24, this call expired far out of the money, meaning it expired worthless and no shares were called away. The full premium collected from selling that covered call was retained as profit, and the shares remain in the account available for selling new covered calls.
This outcome—retaining both the shares and the premium—is the ideal scenario for covered call sellers when the stock trades sideways or declines. The downside is that the stock price declined substantially from where it was when the position was established, creating unrealized losses on the underlying shares that partially offset the premium income collected.
To understand the complete story, the demonstration shows accessing the broker's account statement and filtering to display the past 30 days of transactions. This reveals:
These transactions occurred exactly as expected based on pre-vacation planning. The extended expiration dates (approximately 24 days when sold) provided sufficient time to be away without needing to monitor or adjust positions, while still generating meaningful premium income.
Before making any new trading decisions, the demonstration shows the critical step of recording all completed transactions in the MyATMM cost basis tracking system. This ensures accurate cost basis calculation and provides the foundation for informed strike selection going forward.
The position history reveals that the six covered call contracts sold on May 28 replaced two previous covered call positions. Rather than tracking multiple overlapping covered call records, the demonstration shows a practical approach: delete the two previous positions and replace them with a single new entry representing the May 28 transaction.
This consolidation simplifies record-keeping without sacrificing accuracy. The new covered call entry captures:
After entering these values and clicking save, MyATMM calculates the net credit of $245.91 and moves the transaction to the permanent history. This covered call will remain in the position tracker until it either expires (which it did) or is closed via buy-to-close transaction.
Next, the May 28 cash-secured put transaction is entered as a new position:
The demonstration highlights the substantial premium collected on this put—$335 for a single contract represents exceptional premium income, particularly for a put with a $28.50 strike. This high premium reflects the significant volatility in BITO during this period, with the stock price having recently declined from the low $30s into the high $20s.
After saving this transaction, MyATMM displays it in the proposed records with the net credit of $334.98. Clicking the save icon moves it to permanent history, and it now appears in the active positions awaiting either expiration or assignment.
The covered call expired worthless on June 21 when the stock closed at $24, well below the $29 strike. To process this in MyATMM, the demonstration shows simply clicking the delete/close button on that covered call position since no buy-to-close transaction is needed for expired worthless options.
This removes the covered call from active positions and finalizes the profit realization—the full $246 premium is now locked in as realized income, and the 600 shares that were covered by these calls are now free to have new covered calls sold against them.
The cash-secured put expired in the money (stock at $24, put strike at $28.50), triggering automatic assignment on June 22. The demonstration shows clicking the "Assign" button on this put position, which opens a dialog to record the assignment details:
After clicking submit, this assignment is recorded and the position updates immediately. The 100 shares at $28.50 cost basis are added to the stock records, and the total share count increases from 600 to 700 shares. The cash-secured put position is removed from active options since it has been fully settled through assignment.
With all vacation period transactions now recorded, MyATMM displays the updated position metrics. The cost basis section shows multiple assignments at varying prices accumulated over time, with the system automatically calculating the weighted average cost basis across all shares:
Average Cost Basis: $28.93 per share
This $28.93 represents the blended purchase price across all 700 shares, accounting for assignments that occurred at prices ranging from the low $20s to over $30 as the stock price fluctuated over several months. Knowing this precise cost basis is essential for selecting appropriate covered call strike prices that either protect against assignment below cost or intentionally allow assignment at acceptable profit levels.
With a $28.93 cost basis and the stock trading at $24, this position currently shows an unrealized loss of approximately $4.93 per share, or $3,451 total. However, the position has collected $1,900+ in total option premium over time, reducing the economic loss substantially.
Understanding the true cost basis informs strike selection: selling covered calls at $29 or above protects the original cost basis if assigned, while strikes below $28.93 would realize a capital loss if assigned (though still keeping all premium collected).
With 700 shares now owned and all previous options positions closed, the account is ready for establishing new positions. The demonstration reveals a practical technique for simplifying strike selection when you already know your target strike price: filtering the option chain to display only that specific strike across all expiration dates.
With a cost basis of $28.93, the $29 strike sits just above breakeven and represents an attractive covered call strike for several reasons:
Rather than displaying dozens of strike prices at each expiration date, the demonstration shows entering "29" into the strike filter field in the broker's option chain interface. This filters the entire display to show only $29 strikes at every available expiration, dramatically simplifying visual scanning to compare premium across different timeframes.
The filtered display reveals:
| Days to Expiration | Strike | Bid | Mark | Ask |
|---|---|---|---|---|
| 5 days | $29 | $0.02 | $0.04 | $0.06 |
| 12 days | $29 | $0.10 | $0.16 | $0.22 |
| 19 days | $29 | $0.19 | $0.40 | $0.60 |
| 33 days | $29 | $0.00 | $0.60 | $1.20 |
This strike filtering technique provides instant visibility into how premium scales with time, allowing quick comparison of income-per-day across different expiration choices. The demonstration notes that while longer expirations show higher absolute premium numbers, the bid-ask spreads are often extremely wide (as seen in the 33-day expiration with $0 bid and $1.20 ask), suggesting these options have little liquidity and may be difficult to fill at reasonable prices.
The demonstration settles on the monthly expiration approximately 19 days out, which offers a $0.16 mark price. While not a massive premium, this represents reasonable income for a strike that sits far out of the money (stock at $24, strike at $29), providing substantial upside room if the stock rallies.
The trader acknowledges this is a compromise approach: with more time available for active management, weekly expirations would likely generate more total premium through frequent rollovers. However, with ongoing vacation plans and weekend projects consuming time, the monthly approach provides "set it and forget it" convenience while still collecting meaningful premium.
With 700 shares owned, the trader could sell 7 covered call contracts. The demonstration shows placing an order for 7 contracts at the $29 strike with approximately 12 days to expiration (choosing the nearer monthly over the 19-day expiration after reassessing the premium structure):
This order is placed as a limit order at the mark price, positioned to receive a fill at a fair price between the bid and ask.
The final component of rebuilding the position involves selling another cash-secured put to continue systematically accumulating shares. This section reveals a critical insight about premium efficiency: extending from one week to two weeks can triple the premium while only doubling the time commitment.
After resetting the option chain strike filter to display multiple strikes instead of just the $29 used for covered calls, the demonstration shows focusing on the at-the-money area around the current $24 stock price. At-the-money puts typically offer optimal premium collection, balancing high time value with reasonable assignment probability.
The $24 strike put premiums across different expirations show a striking pattern:
| Days to Expiration | Strike | Premium (Mark) | Premium Per Day |
|---|---|---|---|
| 5 days | $24 | $0.46 | $0.092 |
| 12 days | $24 | $1.92 | $0.160 |
The 12-day expiration offers $1.92 in premium compared to just $0.46 for the 5-day expiration. This represents more than 4x the premium while only requiring 2.4x the time commitment. On a per-day basis, the 12-day expiration generates $0.160 per day versus $0.092 per day for the 5-day, making it 74% more efficient from an income-per-day perspective.
The demonstration offers insight into why the premium structure shows such dramatic non-linear scaling. The trader notes this pattern frequently occurs when the longer expiration spans an ex-dividend date or other significant event that the shorter expiration misses.
In BITO's case, the monthly dividend payment typically occurs near the first of each month. Options that expire after the ex-dividend date incorporate some of the expected dividend value into their pricing, since option sellers who hold short put positions through the ex-dividend date don't receive the dividend (it goes to share owners), creating opportunity cost that must be compensated through higher premiums.
This premium structure makes the two-week expiration dramatically more attractive from an income-per-day perspective, even for traders who initially prefer weekly cycles. When the market offers such obvious premium efficiency advantages, adapting the expiration selection to capture that efficiency makes strategic sense.
The demonstration shows placing an order to sell one cash-secured put contract:
This order is placed at the mark price of $1.92, positioned between the $1.82 bid and $2.02 ask. The substantial premium collected ($192 for a single contract) represents exceptional income for a two-week holding period, demonstrating the power of combining volatility (BITO's high implied volatility) with strategic expiration selection (choosing the expiration that captures the dividend premium boost).
During the position review, the demonstration reveals an important insight about BITO's exceptional dividend yield and a critical limitation of paper trading accounts that option sellers should understand when evaluating total returns.
The trader mentions that BITO recently paid a dividend of $1.76 per share in their real money trading account where they also hold BITO positions. With the stock trading around $23-24, this represents approximately 7.3% yield on a single monthly payment, which annualizes to an extraordinary 88% yield if sustained.
This exceptional yield results from BITO's futures-based structure. As a Bitcoin Strategy ETF that holds futures contracts rather than actual Bitcoin, the fund experiences roll costs when contango conditions exist in Bitcoin futures markets. These roll costs are distributed to shareholders as return of capital or capital gains distributions, creating monthly income that can reach exceptional levels during periods of steep contango.
Had the demonstration been conducted in a real money account, the 600 shares owned before the most recent assignment would have generated:
600 shares × $1.76 per share = $1,056 in dividend income
This $1,056 represents income entirely separate from the $581 in option premium collected during the vacation period ($246 from covered calls + $335 from the cash-secured put). Combined, the total income would have been $1,637 on a position with approximately $18,000 in market value (600 shares × $30 approximate average price during the period), representing over 9% return from income alone in a single month.
The demonstration explicitly acknowledges that paper trading accounts do not reflect dividend payments. After observing the $1.76 per share dividend in his real money account, the trader checked the paper trading account where this demonstration was conducted and found no dividend payment recorded.
This represents an important limitation for traders using paper trading to learn option strategies on dividend-paying stocks and ETFs: the paper trading results will understate total returns by excluding the dividend component. For BITO specifically, this understatement is dramatic given the 80-90% annualized yields observed during peak contango conditions.
Traders should account for this limitation when evaluating paper trading results and understand that real money implementations of the same strategy on dividend payers like BITO would generate substantially higher total returns than paper trading demonstrates.
The BITO strategy demonstrated represents a dual-income approach that combines:
This combination creates exceptional total yield potential, though investors should recognize that BITO's dividend yields are highly variable based on Bitcoin futures market structure and cannot be assumed to remain at peak levels indefinitely.
30-Day Period Income:
Return Calculation: $1,637 income / $18,000 position value = 9.1% monthly return from income alone (not including any stock price appreciation)
Before concluding the post-vacation position review, the demonstration shows an essential discipline for cost basis tracking: reconciling the account balance between the broker platform and the tracking software to ensure all transactions have been recorded accurately.
Cost basis tracking software like MyATMM calculates position metrics based on the transactions you enter. If you miss recording a transaction, forget a commission, or enter an incorrect premium amount, the calculated cost basis will be wrong. This error cascades into future strike selection decisions, potentially causing you to sell covered calls below your true cost basis or misjudge your breakeven point.
Regular reconciliation catches these errors immediately, allowing correction before the inaccuracy affects trading decisions. The reconciliation process is straightforward: compare the total account balance shown in your broker platform against the balance displayed in your tracking software. If they match, all transactions have been recorded accurately. If they don't match, review recent transactions to identify what was missed or entered incorrectly.
The demonstration shows opening both the broker platform and the MyATMM dashboard simultaneously to compare balances:
The exact match confirms that all vacation period transactions have been recorded correctly in MyATMM, including both option premiums, assignment costs, and all commissions and fees. This gives confidence that the $28.93 cost basis calculation is accurate and can be reliably used for selecting covered call strikes going forward.
After confirming reconciliation, the demonstration shows accessing MyATMM's premium tracking feature to review monthly premium collection over time. This historical view provides perspective on how different trading approaches (weekly vs. monthly options) affect total income generation:
| Month | Premium Collected |
|---|---|
| May 2024 | $941 |
| June 2024 | $335 (incomplete month, will update) |
The demonstration notes that June's premium appears lower because the month isn't complete yet—the $246 covered call premium and $335 put premium that were just recorded won't show up in the monthly summary until those positions fully close (which happened after this recording when the options expired).
This monthly tracking provides valuable feedback about strategy effectiveness, allowing traders to compare income generation across different time periods and trading approaches to identify what works best for their schedule and objectives.
The demonstration concludes by discussing the planned approach going forward, which involves transitioning from the passive monthly option approach used during vacation back to more frequent weekly or biweekly cycles now that time permits more active management.
While monthly options provided the "set it and forget it" convenience needed during vacation, the trader acknowledges they generate less total premium than consistently rolling weekly options. This occurs because:
Rather than rigidly committing to weekly cycles, the demonstration outlines a flexible approach that optimizes for premium-per-day efficiency:
The vacation period success demonstrates several factors that enable option income strategies to work with minimal monitoring:
These principles allowed the demonstrated position to generate 2.7% return over 30 days without any active management, proving that systematic option income strategies can continue working even when the trader is completely disconnected.
The vacation period success demonstrates that option income strategies can be structured for varying levels of time commitment. Here's how to implement a similar approach adapted to your schedule and objectives.
If you can monitor positions regularly throughout the week:
If you prefer less frequent monitoring while maintaining reasonable activity:
When life circumstances limit available time for active trading:
Regardless of your chosen time commitment level:
The vacation period case study demonstrates that systematic option income strategies can generate consistent returns with minimal active management when properly structured using extended-duration contracts and conservative strike selection.
The demonstrated position generated 2.7% return over 30 days through:
While the 2.7% monthly return demonstrates strong passive income potential:
Options trading involves significant risk and is not suitable for all investors. Selling cash-secured puts obligates you to purchase shares at the strike price regardless of how far the stock declines. Covered calls cap upside potential and provide only limited downside protection equal to the premium received.
BITO is subject to substantial risks including Bitcoin price volatility, futures market risk, contango and backwardation effects, tracking error, regulatory risk, and the risk of total loss. Dividend yields from BITO are highly variable and depend on Bitcoin futures market structure. Historical distributions do not predict or guarantee future distribution levels.
The 2.7% monthly return demonstrated occurred during a specific market period and should not be extrapolated as a guaranteed or typical result. Future returns may be significantly different, including negative returns from capital losses.
Extended-duration option strategies reduce monitoring requirements but increase exposure to adverse price movements that may occur while positions are unmonitored. Being away from positions for extended periods may result in missed adjustment opportunities.
This content is for educational purposes only and should not be considered financial advice or a recommendation to trade any particular security or implement any specific strategy. Always consult with a qualified financial advisor before making investment decisions.
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