Strike Selection Philosophy

The engine writes calls that are meaningfully out of the money. The goal is not to maximize premium on any single cycle but to keep the probability of assignment low enough that, over dozens of cycles per year, the cumulative premium income far exceeds the occasional assignment cost.

In practice, this means the strikes are set well above the current price. If the underlying rallies modestly, the call expires worthless and the borrower keeps everything: the premium, the shares, and the full upside of the move. Assignment only occurs when the stock has an unusually strong week, and even then the borrower keeps the premium and all gains up to the strike.

Each asset has its own calibration. A high-volatility name like MSTR requires a wider distance between the current price and the strike to maintain the same probability of expiring worthless. A lower-volatility name like AAPL can use a tighter distance because the stock simply does not move as far in a typical week. The engine adjusts these settings per asset, per market regime, so the risk profile stays consistent even as conditions change.

The result is a strategy that wins most weeks by a small amount, loses occasionally by a bounded amount, and compounds favorably over time. The engine never chases a single large premium at the expense of the pool's long-term health.