What makes an option worth selling.

Step one: screen the business

The method begins where your investing already begins, with the question of what you would own. A covered call puts you on both sides of ownership: if the stock falls, you still hold it, and if it rises past the strike, you part with it. So the only comfortable position is a company you would be glad to keep and content to sell, and no premium is rich enough to make a shaky business meet that bar.

In practice this means running your fundamental criteria before anyone mentions an option: valuation, profitability, growth, balance-sheet health, whatever standard you would apply before buying a share outright. Only the companies that clear it deserve a look at their option chains. FITools runs this step as a screen of twenty-two fundamental filters you set yourself, but the judgment is portable: a watchlist built by hand against the same criteria serves the same method.

Step two: judge the contract

A premium is never good in isolation; it is only good against the alternatives. The same capital could sit in Treasury bills, and the same strategy could run passively on the S&P 500, so a covered call has to be judged on its edge over the higher of those two bars. That comparison is the heart of the scoring math: a contract earns income credit only for what it pays beyond that hurdle, a fat premium that fails to clear it earns nothing, and the bar rises when market volatility runs high, because wilder markets demand a wider margin.

FITools compresses the full judgment into one score with a letter grade, A to F, built from five weighted components:

The score is built to argue against trades, too: named warning flags ride with every result, calling out premiums that fail the hurdle, thin edges, wide spreads, short expirations, and implied volatility running below what the stock has actually been doing. When volatility data is missing, that component scores below neutral rather than assuming the best. And every result shows its work: the component scores, their weights, and a written rationale for the grade.

In the app, these five components surface regrouped into four labeled panels, Vol Edge, Protection & Return, Time Decay, and Liquidity, each with its own subscore; the arithmetic above is the engine underneath them. The grade ranks candidates; it does not make the decision. Whether you want to own more or less of a company this month is a judgment no score can hold, and it stays with you.

Step three: follow the position

Selling the call is the middle of the trade, not the end. The method's third decision is made in advance: name the conditions that deserve your attention, then check for them on a schedule instead of by mood. FITools evaluates every open position against its rules on a five-minute cycle. The rules, and when each one fires:

Profit target

fires when the position has captured your chosen share of the premium, the signal that most of the trade's value is already banked.

Expiration window

fires when the position enters its final stretch, where time decay does its fastest work.

Expiration floor

fires when days to expiration drop below your minimum.

Breakeven approach

fires when the stock price closes in on your breakeven.

Strike crossing

fires when the stock moves into the money, the zone where assignment becomes live.

Stop loss

fires when the position's loss crosses your limit.

Earnings ahead

fires when an earnings date lands before expiration, the event risk the screen let you avoid up front.

Dividend assignment risk

fires when the option's remaining time value falls below a pending dividend, the point where early assignment becomes economically rational for the buyer.

Alerts carry three severities, from informational to urgent, with per-rule cooldowns so a persistent condition does not become noise. When market data goes stale, urgent alerts wait for fresh quotes rather than firing on old ones.

The rules keep watch; the decisions they set up remain yours. A decay gauge shows how much time value each position has left, and the method's standing preference is to close early: once most of the premium is captured, the remaining pennies rarely pay for the final days, when small stock moves swing the position hardest. When expiration approaches instead, a roll view lays out candidate replacement contracts side by side, scenario by scenario, so rolling is a comparison you make rather than an emergency you improvise.