I wanted to look at the same strategy over different stocks. I chose many stocks that had very different performance over the same amount of time to check if the results were different. Correlation between a stock's own buy-and-hold return and the strategy's gap relative to it: r = -0.51.
By buy-and-hold return bucket
| Buy-hold range | N stocks | Avg buy-hold | Avg strategy gap | Tickers |
|---|---|---|---|---|
| > +15% | 4 | +19.31% | -5.36% | JNJ, T, XOM, PYPL |
| +5% to +15% | 3 | +10.60% | -1.57% | PFE, KO, AAPL |
| 0% to +5% | 4 | +2.18% | -0.27% | MMM, MO, DIS, BAC |
| -5% to 0% | 1 | -4.66% | -10.25% | IBM |
| -15% to -5% | 7 | -7.82% | +4.98% | GE, BA, WMT, C, CVS, UPS, F |
| < -15% | 2 | -22.15% | +1.67% | INTC, NKE |
Every stock tested
| Ticker | Buy-hold | Strategy | Gap | Assigned | Expired | Skipped |
|---|---|---|---|---|---|---|
| PYPL | +24.21% | +11.26% | -12.95% | 4 | 8 | 2 |
| XOM | +18.51% | +23.29% | +4.78% | 4 | 8 | 2 |
| T | +17.49% | +15.92% | -1.57% | 1 | 10 | 3 |
| JNJ | +17.03% | +5.33% | -11.70% | 4 | 8 | 2 |
| AAPL | +12.19% | +9.14% | -3.05% | 6 | 6 | 2 |
| KO | +10.68% | +6.38% | -4.30% | 3 | 9 | 2 |
| PFE | +8.93% | +11.58% | +2.65% | 2 | 10 | 2 |
| BAC | +3.02% | +5.62% | +2.60% | 1 | 11 | 2 |
| DIS | +2.98% | +2.82% | -0.16% | 2 | 10 | 2 |
| MO | +1.42% | -3.81% | -5.23% | 2 | 10 | 2 |
| MMM | +1.28% | +2.98% | +1.70% | 2 | 10 | 2 |
| IBM | -4.66% | -14.91% | -10.25% | 7 | 5 | 2 |
| F | -5.05% | -0.71% | +4.34% | 0 | 12 | 2 |
| UPS | -5.81% | +3.08% | +8.89% | 3 | 9 | 2 |
| CVS | -6.71% | -0.50% | +6.21% | 1 | 11 | 2 |
| C | -7.07% | -1.93% | +5.14% | 2 | 10 | 2 |
| WMT | -8.28% | -3.14% | +5.14% | 2 | 10 | 2 |
| BA | -9.32% | -7.56% | +1.76% | 2 | 10 | 2 |
| GE | -12.51% | -9.14% | +3.37% | 2 | 10 | 2 |
| NKE | -20.84% | -17.81% | +3.03% | 1 | 10 | 3 |
| INTC | -23.46% | -23.16% | +0.30% | 3 | 9 | 2 |
What I found
The more a stock rallied over the window, the more the covered call strategy tended to lag simple buy-and-hold: visible clearly at the top of the table (PYPL -12.95%, JNJ -11.70%) and bottom (INTC +0.30%, NKE +3.03%). In stocks that fell or stayed flat, the strategy consistently matched or beat plain stock ownership: the premium collected cushioned the decline, and assignment was rare, so most weeks kept full exposure to any recovery.
Two results don't fit that pattern cleanly, worth naming rather than hiding. XOM rallied +18.5% yet the strategy still slightly outperformed (+23.3%) — most likely because assignment resets the position at a fresh cost basis the following Monday, and a brief dip right after assignment before the stock continued climbing let the strategy re-enter lower than a single static buy-and-hold. IBM is the sharper outlier: down only -4.7%, yet the strategy lost -14.9%, a -10.2-point gap in the wrong direction. IBM was assigned 7 of 13 weeks, far more than any other name, meaning it wasn't a smooth decline but a choppy one: repeated short-lived rallies inside a longer downtrend, each one capping gains right before the stock fell again. That pattern is close to the worst case for this strategy, it caps every rally on the way up without ever getting the benefit of riding a sustained recovery.
This makes sense; the gain is capped, so when a stock performs extremely well, it is actually not beneficial to run this strategy. I believe that this strategy is perfect when you want to bet on market volatility (you think the IV is higher than it should be so you can collect extra premium), or when you are already long a stock that you think will have a slow decrease in the next few weeks.