Days to Expiry logo
DaystoExpiry
← Back to all articles

Oct 13, 2025

Covered Calls by Expiration: Weekly vs Monthly Income Comparison

Weekly covered calls vs monthly: which generates more income? Spoiler: it depends on your capital and tolerance for active trading. Here's the complete breakdown.

You own 100 shares of Apple. You paid $200 per share. They're sitting there, doing nothing.

Selling covered calls against them sounds smart. You collect premium, generate income, and keep your shares. Win-win.

But then you ask the question that stops most traders: How often should I sell calls?

Sell weekly calls, and you're glued to your account. Every week there's a decision: let them expire, close early, roll to next week. It's exhausting.

Sell monthly calls, and you're hands-off for 30 days. But the premium is smaller (wait, is it?), and you miss out on faster trading cycles.

Which actually makes more money?

Here's the answer: it's not about which frequency is "better." It's about which frequency you can execute consistently without burning out or taking unnecessary risks.

That said, the math matters. This guide shows you the hard numbers on weekly vs monthly covered calls, what works for different account sizes, and how to pick the schedule that fits your temperament.

The DTE Reality: Why Expiration Matters for Calls

Before we compare schedules, let's establish what actually changes when you go from weekly to monthly calls.

Time decay (theta) accelerates near expiration. A call with 30 days to expiration loses value slowly. A call with 7 days loses value noticeably each day. A call with 1 day loses value by the hour.

For call buyers, this is painful. Their long calls melt away.

For call sellers (you), this is beautiful. Every day that passes, your short calls lose value. That's money in your pocket.

Here's the key insight: The faster time decay near expiration means weekly calls collect premium per day faster than monthly calls. But monthly calls collect larger total premiums.

Example:

  • Monthly call (30 DTE, strike $225): Collect $2.00 premium now
  • Weekly call (7 DTE, strike $225): Collect $0.50 premium now

Over 30 days:

  • Monthly: $2.00 collected one time = $2.00
  • Weekly: $0.50 × 4 weeks = $2.00 total, but collected in smaller chunks

On the surface, they match. But the timing and risk profiles are different.

Weekly Covered Calls: The High-Frequency Approach

How It Works

Every Friday (or sometimes Wednesday), you sell a call expiring the following Friday. Strike is 2-3% OTM (out-of-the-money), giving you room to keep the shares.

You collect a small premium ($0.30-$0.80 per share typically). Repeat 52 times per year.

The Math

Assume:

  • 100 shares of XYZ at $100
  • Weekly call at $103 strike
  • Collect $0.50 per share = $50 per week

Annual gross: $50 × 52 weeks = $2,600
Annualized return: 26% on a $10,000 position

That sounds incredible. And it can be—if you execute perfectly. Here's the catch:

The Reality of Weekly Calls

1. Active management is required.

Every week you're deciding: let it expire, close early, or roll to the next week. If the stock rallies hard, do you:

  • Let it be called away (lose upside)?
  • Buy back the call (lock in loss, keep shares)?
  • Roll up to a higher strike for more premium (reset the risk)?

No one can perfectly anticipate this. You'll make mistakes. You'll buy calls back at the worst time. You'll get called away when the stock was about to drop.

2. Assignment friction is real.

Getting assigned means your shares are called away at the strike. You have to decide: reinvest the proceeds or move to cash. If reinvesting, you lose two trading days (settlement delay) where you could have been collecting premium.

Over a year, a dozen assignments = a dozen friction events. That adds up to lost opportunities.

3. You're more likely to violate your own rules.

Weekly trading means weekly decisions. Weekly decisions breed impatience. You might sell a call at a strike you're not comfortable with just because the premium looked decent that day. You might close a call early to chase the next "opportunity" instead of letting the trade work.

The higher frequency makes it easier to deviate from your system.

4. Tax complexity.

Selling calls changes your tax accounting. Weekly calls = weekly short-term capital gains (if assigned). Monthly calls = monthly short-term gains. The paperwork and tax impact compound.

When Weekly Makes Sense

  • Small portfolio ($5K-$25K): Capital efficiency matters. Multiple small premiums add up.
  • High-volatility stocks: IV spikes create fat weekly premiums. Ride those cycles.
  • Day trader temperament: If you're already trading weekly, adding weekly calls is a natural fit.
  • Bullish outlook for stock: Stock is climbing. Weekly calls let you capture the upside in increments.

Monthly Covered Calls: The Hands-Off Approach

How It Works

Once a month, you sell a call expiring 30 days out. Strike is 2-5% OTM. You collect premium and leave it alone for 30 days.

The Math

Assume:

  • 100 shares of XYZ at $100
  • Monthly call at $104 strike
  • Collect $2.00 per share = $200 per month

Annual gross: $200 × 12 months = $2,400
Annualized return: 24% on a $10,000 position

Interestingly, monthly returns are similar to weekly, but for different reasons:

  • Weekly: Many small premiums ($50 × 52 = $2,600)
  • Monthly: Fewer, larger premiums ($200 × 12 = $2,400)

The difference is marginal. The big differences are in management and risk.

The Reality of Monthly Calls

1. Hands-off execution.

Sell the call. Forget about it for 30 days. Let time do the work. Your mental energy is spent elsewhere.

This matters more than traders admit. Decision fatigue is real. Weekly trading creates decision fatigue. Monthly trading preserves mental energy.

2. Larger premium collection.

Because you're committing to 30 days, you collect more premium upfront. That premium sits in your account, earning nothing, but it's yours from day 1. Weekly puts this premium at risk for a longer time (you don't fully earn it until day 7).

3. Assignment is less frequent.

With a 30-day call 3-5% OTM, your stock has to move 3-5% in a month to trigger assignment. That's lower probability than a 7-day call being in the money.

Assignment only happens if:

  • Stock rallies strongly AND
  • You let it expire (vs rolling)

Over a year, maybe 3-4 assignments instead of 12. That's dramatically simpler.

4. Volatility works in your favor during the position.

If the stock drops 5% and IV crushes, your short call loses value faster than the stock. Now you can close the call early and keep the shares. You've captured the premium and kept the upside.

Weekly calls don't have this luxury. A week is too short for volatility reversals to significantly help.

When Monthly Makes Sense

  • Moderate portfolio ($25K-$100K+): One $2,000 premium per month is meaningful.
  • Fundamental long-term hold: You own the stock because you like it at these prices. Calls are a side income stream.
  • Hate active trading: Monthly is a "set and forget" schedule.
  • Lower volatility stocks: Stable dividend stocks (JNJ, PG, KO) have modest IV. Monthly calls suit them perfectly.

Head-to-Head: Weekly vs Monthly Decision Matrix

Factor Weekly Monthly Advantage
Gross annual return 26%* 24%* Weekly (by 2%)
Management effort 52 decisions/yr 12 decisions/yr Monthly (4x less)
Assignment frequency ~12/yr ~3-4/yr Monthly (fewer friction)
Mental fatigue High Low Monthly
Best for premium capture Volatile spikes Steady premium Depends on market
Tax complexity High Lower Monthly
Suitable account size $5K-$50K $25K+ Depends on capital
Ideal stock type High-IV, momentum Stable, dividend Depends on holdings

* Assuming perfect execution and no mistakes. Reality usually differs.

The Hybrid Approach: Weekly + Monthly

Here's what most successful covered call sellers actually do: a mix.

The 60/40 Split:

You have $100,000 to deploy.

  • 60% ($60,000) in monthly calls: Set and forget. Collect ~$200/month in premium.
  • 40% ($40,000) in weekly calls: Active trading on your high-conviction, high-volatility stocks.

This gives you:

  • Steady base income from monthly (predictable, low-effort)
  • Volatility capture from weekly (higher premiums during spikes)
  • Portfolio diversification (stocks + income streams)
  • Mental balance (some positions are hands-off, some are hands-on)

The quarterly reset:

Run monthly calls Sept, Oct, Nov. Switch to weekly in Dec (earnings season = elevated IV). Back to monthly in Jan. This adapts to market seasons.

Real-World Scenario: Weekly vs Monthly Side-by-Side

Let's model an actual situation and see the numbers in practice.

Setup: You own 300 shares of Microsoft at $425. Current date: Oct 21, 2025.

Scenario A: Weekly Calls

Week Expiration Strike Premium Assignment? Notes
Oct 28 Nov 7 $433 $0.75 No Stock stays flat. Premium collected.
Nov 4 Nov 14 $433 $0.70 No Stock drops 1%. Still safe. Premium collected.
Nov 11 Nov 21 $433 $0.80 Yes Stock rallies to $435. Assigned. $43,300 proceeds.
Nov 18 Nov 28 $433 Reinvest N/A Reinvest $43,300 into stock. Sell new calls.

Four weeks of trading:

  • Premium collected: $0.75 + $0.70 + $0.80 + $0.70 (new position) = $2.95 per share = $885 on 300 shares
  • Assignments: 1 (friction event, reinvestment friction)
  • Decision points: 4 (more opportunities to mess up)

Scenario B: Monthly Calls

Month Expiration Strike Premium Assignment? Notes
Oct 21 Nov 21 $436 $2.50 No? Collect $2.50. Stock rallies hard mid-month...
Oct 28 Nov 21 (ongoing) N/A Likely yes Stock is at $438. Likely assignment.

One month of trading:

  • Premium collected: $2.50 per share = $750 on 300 shares
  • Assignments: 1 (if stock rallies)
  • Decision points: 1 (simplicity)

Comparison:

  • Weekly: $885 premium, 1 assignment, 4 decision points
  • Monthly: $750 premium, 1 assignment, 1 decision point

The weekly nets an extra $135 but requires 4x the mental energy and more decision points where you could mess up.

The real insight: If you mess up even one weekly decision (close early at a loss, get assigned at the wrong time, miss a day and roll late), you lose $135 of profit. Monthly's simplicity protects you from that.

Assignment: What Happens When You Get Called Away?

This is where weekly and monthly diverge in their psychology.

Weekly Assignment (More Common)

You get assigned mid-week. Your shares are sold at the strike. You have cash. Now what?

Option 1: Reinvest immediately in the same stock. This works if the stock is still attractive at current prices.

Option 2: Deploy to a different stock. This is actually good—it lets you rebalance or capture new opportunities.

Option 3: Stay in cash. This is fine, but you're losing income generation.

The weekly rhythm means you're comfortable with assignment. It's expected. You're ready.

Monthly Assignment (Less Expected)

You're not monitoring as closely. Suddenly you get notice: "You've been assigned." Your 300 shares are gone.

This hits differently. You weren't "expecting" it for another 2+ weeks. Now you're scrambling to decide what's next.

Psychologically, this matters. If monthly assignment surprises you, you'll make bad reinvestment decisions. You might chase a hot stock. You might stay in cash too long out of frustration.

Solution: Set a calendar reminder at day 20 of your monthly call.** Check: "Am I OK getting assigned this week?" If yes, let it happen. If no, buy back the call and avoid the surprise.

Volatility Seasons: When Weekly Wins, When Monthly Wins

Earnings season (Jan, Apr, Jul, Oct):

  • IV spikes → weekly premiums are fat
  • Assignment probability is binary (pre-earnings vs post-earnings)
  • Play: Go weekly in the 2-3 weeks leading into earnings. Post-earnings, switch back to monthly.

Market volatility events (Feb 5, 2024; Aug 5, 2024):

  • Flash crashes spike IV for days
  • Covered call premiums are juicy for a limited window
  • Play: Exploit the week with weekly calls. Cash out and reset.

Summer doldrums (Jun-Aug):

  • IV is lowest
  • Premiums are thin across the board
  • Play: Monthly is less painful because you're collecting $X per month regardless. Weekly's small premiums feel even smaller.

Year-end rally (Nov-Dec):

  • IV remains elevated
  • Tax-loss harvesting creates volatility spikes
  • Play: Weekly calls capture these micro-spikes. Go weekly if you have the energy.

The Guardrails: Keep Your Income Consistent

Regardless of weekly vs monthly, here's how to protect your income stream:

Rule 1: Never Let Premium Dictate Strikes

Don't sell a call at a strike you're uncomfortable being called away at, even if the premium is juicy. Weekly tempts you to do this. Resist.

Rule 2: Always Have a Reinvestment Plan

If assigned, where's your capital going next? Same stock? Different stock? Cash? Decide in advance, not in panic.

Rule 3: Set a Monthly Income Target

If you're targeting $2,000/month from covered calls on a $100K portfolio, that's 2%. Track it. If weekly is giving you $2,200 through September but then crashes to $1,200 in October, you know something's broken (stock crashed, IV collapsed, assignment sucked).

Rule 4: Don't Chase IV Spikes for a Tiny Extra Premium

A spike from 30 to 40 IV percentile might add $50 to the premium. Not worth the risk of getting called away at the worst time.

Rule 5: Close Winners Early, Let Losers Run

If your covered call premium hits 50% max profit (you sold for $1.00, it drops to $0.50), close it. Don't wait for expiration. Free up the capital.

If a position goes to 90% loss (you sold for $1.00, it goes to $0.10), let it expire. The last dollar of decay happens in the final week.

Monthly Call Assignment Strategy (You're OK Getting Assigned)

Here's an advanced play if you're OK with assignments:

Sell 5% OTM monthly calls. Higher strike = higher probability of assignment, but fatter premium.

When assigned:

  1. Take the proceeds in cash.
  2. Wait 1 day (settlement lag).
  3. Buy back in at a better price (the stock usually dips after a rally that triggered assignment).
  4. Repeat.

This turns covered calls into a cash collection system. You're extracting premium and rebalancing at regular intervals.

Over 5 years:

  • Assignment every 6-8 weeks
  • Each rebalance captures a small price difference
  • Cumulative effect is significant

The catch: it requires discipline and attention. You can't be truly "hands-off."

The Question: What Will YOU Actually Execute?

Here's the honest truth: the best covered call strategy is the one you'll actually follow consistently.

If you hate trading, choose monthly. Weekly will burn you out, and when you burn out, you stop executing. That's worse than monthly's lower premiums.

If you love trading and have the time, choose weekly. Monthly will feel boring and inactive. You'll tinker and make mistakes.

If you're in between, choose the hybrid (60% monthly, 40% weekly).

The exact percentages don't matter as much as choosing a schedule you can stick with for a full year.

Your Action Plan

Pick your approach this week:

  1. Define your portfolio size and temperament:

    • Is $10,000 or $50,000 or $500,000?
    • Do you like active trading or passive?

  2. Choose your cadence:

    • Weekly (high activity, high returns if executed well)
    • Monthly (low activity, steady returns)
    • Hybrid (balanced)

  3. Pick 2-3 stocks to start:

    • Stocks you own (or can buy easily)
    • Stocks you understand
    • Stocks you're fine holding long-term

  4. Sell your first call:

    • Use your chosen DTE
    • Use your chosen strike
    • Execute

  5. Track it for 3 months:

    • Note premium collected, assignments, outcomes
    • Evaluate: am I comfortable with this cadence?
    • Adjust or double down

The math shows weekly and monthly are roughly equivalent when executed perfectly. Reality favors the one you'll actually execute consistently. Choose that one.

To understand how covered calls compare to other income strategies, read our CSP vs covered calls comparison. For a capital-efficient alternative, explore the Poor Man's Covered Call. And to integrate covered calls into a complete income system, check out the wheel strategy guide. For deeper insight into time decay mechanics, see our options Greeks guide.

Related Articles