IBIT Covered Call Calculator

Strike Selection & Delta Framework

Delta approximates the probability of an option expiring in the money. A 0.30 delta call has roughly a 30% chance of being assigned — most systematic covered call sellers target the 0.20-0.30 delta range, which corresponds to roughly 5-10% OTM depending on IV and DTE. Lower deltas (further OTM) preserve more upside but generate less premium; higher deltas (closer to ATM) pay more but cap you sooner.

With IBIT, think about strikes in BTC terms. A 0.20 delta call might cap your Bitcoin exposure at $115,000 when BTC is at $100,000. The question isn't just “am I comfortable being called at $62 per share” — it's “am I comfortable capping my Bitcoin exposure at $112,000 for the next 30 days?” The calculator above shows the exact BTC cap for any strike, making this translation automatic.

IBIT's implied volatility (typically 40-65%) inflates premiums relative to equity ETFs, which is why covered call income on Bitcoin ETFs is substantially higher than on SPY or QQQ. This elevated IV also means OTM strikes collect meaningful premium — you don't need to sell near-the-money to generate attractive income, which lets you keep more upside room.

Expiration Selection & Theta Dynamics

Time decay (theta) is not linear — it accelerates as expiration approaches. An option at 60 DTE loses roughly 1.3% of its time value per day. At 30 DTE, that climbs to about 1.8% per day. Inside 14 DTE, the curve steepens sharply: the final two weeks can account for 30-40% of a monthly option's total time value erosion. This acceleration is what makes shorter-dated options attractive to premium sellers.

But theta acceleration comes with a cost: gamma risk. Gamma — the rate of change of delta — is highest near expiration and near the money. For IBIT, where single-day moves of 3-5% are routine, elevated gamma means your near-term covered call can swing from comfortably OTM to deeply ITM in a single session. The premium you collected doesn't change, but your assignment probability does — fast.

The practical tradeoffs by DTE range:

• 7-14 DTE (weeklies): Maximum theta-per-day efficiency. Best for sellers who actively manage positions and can roll or close quickly. Assignment risk is highest — there's less time for adverse moves to reverse. Works best in range-bound or mildly bullish environments.
• 30-45 DTE (monthlies): The most common choice for systematic sellers. You enter the theta acceleration zone where daily decay is meaningful while keeping gamma manageable. Gives Bitcoin's volatility enough time to play out without requiring daily attention. Most sellers target this range because it balances premium capture against the probability of a move large enough to blow through the strike.
• 60-90 DTE: Higher total premium but lower theta-per-day. Ties up capital and caps upside for longer. Reasonable for sellers with high conviction that Bitcoin will consolidate, but the extended commitment is risky given BTC's tendency for sudden regime changes.

There is no universally correct DTE — your choice should reflect your management style, conviction about near-term direction, and willingness to accept assignment. The calculator above lets you compare annualized returns across different DTEs to see the tradeoff quantitatively.

Rolling Strategies

Rolling means closing your current short call and simultaneously opening a new one — typically at a later expiration and sometimes at a different strike. The economics are straightforward: evaluate whether the net credit (or debit) of the roll justifies extending the position.

Roll for a net credit whenever possible. A roll that costs you money (net debit) is paying to stay in the trade — which can make sense when managing an underwater position, but should be a conscious decision rather than a reflexive one. The test: does the new position have a better risk/reward profile than simply closing and starting fresh?

Common roll scenarios for IBIT:

• Roll up and out after a rally: BTC ripped and your call is ITM. You buy back the current call (at a loss) and sell a higher-strike, later-dated call. Done for a net credit, this raises your BTC upside cap while collecting additional premium. If it requires a net debit, consider whether accepting assignment and resetting might be cleaner.
• Roll out at the same strike: The stock hasn't moved much and your call is expiring near worthless. Close it cheaply and sell the next month at the same strike. This is the bread-and-butter mechanical roll for systematic sellers.
• Roll down after a drop: BTC fell and your OTM call is now far OTM with minimal remaining value. Buy it back for pennies and sell a lower strike at the same or later expiration to recapture premium. This lowers your upside cap but improves your effective cost basis.

Tax Considerations

Premiums received from selling covered calls are taxed as short-term capital gains (ordinary income rates) regardless of how long you've held the underlying shares. If your shares are called away, the sale may qualify for long-term capital gains treatment if you've held the shares for over a year — but the premium is always short-term. Consult a tax professional for your specific situation. Learn more about IBIT tax treatment →

Assignment Management

If your covered call is in the money at expiration, your shares will be called away. This means you lose your Bitcoin exposure through the ETF. To maintain exposure, you can: (1) buy the shares back immediately (potentially at a higher price), (2) roll the option before expiration to avoid assignment, or (3) accept the assignment and take the profit. The calculator above shows your total return in the assignment scenario, including the BTC you're giving up.