I bought 100 shares of ARM at $262.40.
A little over two weeks later, my shares were called away at $265.
I made money on the shares. I collected option premium along the way. I even made another quick profit selling and buying back an ARM put.
Then came the painful part.
ARM ran to around $310.
Had I still owned those 100 shares, the move from my $265 assignment price to roughly $310 represented another $4,500 in potential stock appreciation.
I didn't lose $4,500.
But I absolutely gave up the opportunity to participate in it.
And that may be the most valuable lesson from this entire trade.
The Trade Started With $26,240
On September 8, I bought 100 ARM shares at $262.40, putting roughly $26,240 into the position.
Almost immediately, I sold a $265 covered call and collected $665.
My thinking was simple: if I'm going to own the shares, I want them generating cash.
But every covered call has a price.
I had effectively agreed to sell my ARM shares at $265 if the stock moved above my strike and I was assigned.
At the time, that looked like a reasonable trade.
A couple of weeks later, it looked very different.
I Kept Collecting Premium
I subsequently adjusted the call position, with my brokerage history showing a $546 net credit from the short-call roll.
Then on September 17, I sold another $265 call expiring September 25, collecting $700.
The strategy was doing exactly what I wanted it to do:
Turn shares into an income-producing asset.
And then ARM took off.
Assignment Arrived
On September 25, my $265 call was assigned.
My 100 shares were sold at the strike.
I had purchased them at $262.40, so I still captured approximately:
($265 − $262.40) × 100 = $260
of stock appreciation before fees and adjustments.
Nothing about that is a losing trade.
But then ARM kept running.
At approximately $310, those same 100 shares would have been worth roughly $31,000.
From my $265 assignment price alone:
$310 − $265 = $45
$45 × 100 shares = $4,500
That's $4,500 of additional upside I didn't participate in.
This Is the Part of Covered Calls We Don't Talk About Enough
Premium feels like income.
It hits the account immediately.
And when a covered call expires worthless, selling it can feel almost too easy.
But premium isn't free money.
I received cash in exchange for giving someone else the right to buy my shares at a predetermined price.
With ARM, that price was $265.
When ARM subsequently ran toward $310, the true cost of that agreement became obvious.
My biggest cost wasn't a red number in my brokerage account.
It was opportunity cost.
I Still Went Back to ARM
Interestingly, assignment wasn't the end of my ARM trading.
On September 24, I had sold an ARM $300 put expiring October 2 for $870.
On September 25, I bought it back for $580.
That produced another:
+$290 realized profit
I could have waited and tried to squeeze more money out of the contract.
I didn't.
The profit was available. I took it.
That's one part of this strategy I don't want to change.
But ARM Changed How I Think About Covered Calls
The lesson isn't that covered calls are bad.
It's that covered calls need to match what I actually want from the underlying stock.
If I'm actively trying to exit a position, selling calls can make perfect sense.
If I'm holding a slower-moving income position, I may also be perfectly happy exchanging some upside for premium.
But if I own a volatile growth stock that I believe has substantial upside?
That's where I need to think much harder before placing a call only a few dollars above the current share price.
The question isn't simply:
“How much premium can I collect?”
The better question is:
“How much upside am I willing to sell for this premium?”
ARM gave me the answer in dramatic fashion.
Would I Do It Again?
I'd still sell covered calls.
But ARM reinforces why I don't want covered-call income to become an automatic weekly routine on every stock I own.
Strike selection matters.
Expiration matters.
Volatility matters.
And, most importantly, my reason for owning the stock matters.
A $500 or $700 premium can look attractive today.
But if collecting that premium means capping thousands of dollars of potential appreciation in a stock I actually wanted to own, the trade deserves much more scrutiny.
A Profitable Trade Can Still Teach an Expensive Lesson
That's ultimately how I view ARM.
I bought at $262.40.
I was assigned at $265.
I collected option income while holding the shares.
I made another $290 on the put trade.
I made money.
Then I watched ARM run toward $310 without me.
Those two statements can both be true.
And that's probably the most useful thing I've learned from this trade:
Don't judge an options strategy only by how much premium it generates. Measure what you're giving up to collect that premium.
I didn't lose $4,500 on ARM.
But watching $4,500 of potential upside disappear after assignment gave me something almost as valuable:
a much clearer understanding of what a covered call actually costs.
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