Comparing Weekly, Monthly and Longer-Term Covered Call Expirations Using the Same Strike Price

Core Insights - The article challenges the misconception that longer-dated options yield higher profits due to their larger dollar amounts, using NVIDIA Corp. (Nasdaq: NVDA) as a case study [2][9]. Group 1: Option Analysis - The analysis compares three expiration dates for NVDA options: June 6, 2025, July 3, 2025, and June 18, 2026, highlighting the bid prices for a $144.00 call option as $0.72, $4.70, and $27.20 respectively [6][8]. - The initial calculations show that the shortest-term option (June 6, 2025) has an expected return of 0.51% over 3 days, which annualizes to 61.96% [8]. - The 30-day option (July 3, 2025) has a projected return of 3.32%, annualizing to 40.44%, while the long-term option (June 18, 2026) shows a return of 19.24%, annualizing to 18.48% [9][10]. Group 2: Investment Strategy - Shorter-dated options are suggested to provide the greatest annualized returns, allowing for more frequent reassessment of bullish assumptions on underlying securities [10]. - The article emphasizes the importance of focusing on annualized returns rather than the nominal dollar amounts associated with long-dated options [9].