REMEMBER all the profit from 20 cents to $1.00 is mine to keep
Not really.
You buy shares at 0.20. Write cover calls against then accepting 0.05/Call as the Call price. The stock runs to $0.99
You get to keep whatever you got for selling Calls at 0.05. Because the strike was never hit.
Now let's suppose it goes to $1.25.
Someone now wants to exercise their Calls. The shares you used to cover with, you are forced to sell at a price of $0.05. The original price you paid for the shares was 0.20. You now have a loss of -0.15 per share. The person who bought the Calls is the winner for the move up. They have the per share value of $1.25 minus the cost of the Calls.
The other possibility is upon seeing it going over the $1 strike price the week before OE, and believing it was headed further up, you can buy back the Calls to close. Where the Calls would be trailing the PPS. For example Calls are now going for 0.80. You buy to close taking a 0.20-0.80+0.05 hit. While keeping the stock. The stock has gone up +$1.05 from your original purchase price. Which offsets the -0.55 loss from a bet on selling covered Calls which went wrong.
If one is believing the PPS is going to zoom up past $1 in Sep, then one should be writing covered Puts. As the Puts would be fried. However, if the stock crashes, the that won't work out too well. Probably not a good idea to write Puts, given the danger of being tossed from the OTC.
The only place where you win consistently writing Calls is if the stock does relatively nothing. Or if the stock is tossed to the OTC. Then you get the trivial amount from having sold the Calls, while watching your stock get smashed.
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