TXN Poor Man's Covered Call: Strike Selection, Premium & Risk
How to sell poor man's covered calls on Texas Instruments — optimal strikes, expected premium, and the risks that actually matter for a large-cap technology name.
Is TXN a good poor man's covered call candidate?
TXN (Texas Instruments) is a large-cap technology name with a mid-range share price and excellent options liquidity. Implied volatility is low, so premiums are modest. Traders use this name when they want stability and a low probability of assignment rather than maximum yield. It also pays a dividend, which adds a second income stream on top of the premium you collect.
Strike selection for a TXN poor man's covered call
For a TXN PMCC, buy a long-dated call with 0.80+ delta (typically 12-18 months out) as your synthetic long, then sell short-dated calls 3-5% above the stock price at 0.25-0.35 delta. The LEAPS tie up roughly 30-50% of the capital of buying 100 shares, which is especially valuable on a mid-range share price ticker like TXN.
Expected premium and income on TXN
Typical monthly premium collected on TXN runs around 0.5-1.0% of capital, which annualizes to roughly 6-12% if you sell new contracts every cycle. Capital required to run a single contract wheel on TXN is $5,000-$20,000 — the share price and the 100-share lot size set the minimum, not the strategy.
Risk management for TXN poor man's covered call trades
PMCC risk is concentrated at the LEAPS expiration: if the stock collapses, the long-dated call can lose significant value quickly. You also have to manage the short call not going deep in the money against you before your LEAPS appreciates equivalently. TXN is a low-volatility name — the main risk is not sudden moves but slow grinds against you, which hurt covered-call writers who picked strikes too close to the money. Tech names are especially vulnerable to interest-rate shifts and earnings guidance revisions — both tend to produce gap moves that hurt short options.
TXN Poor Man's Covered Call FAQ
Can you run a poor man's covered call on TXN?
Yes. Buy a 0.80+ delta LEAPS on TXN dated 12-18 months out as your synthetic long, then sell short-dated calls 3-5% above the stock at 0.25-0.35 delta. Capital tied up drops from $5,000-$20,000 to roughly 30-50% of that — a meaningful improvement when the share price is a mid-range share price.
What expiration should I use for TXN poor man's covered call trades?
Use 30-45 DTE as a default for TXN. This is the classic theta sweet spot and works well on a stable ticker like this.
Is TXN suitable for beginners selling options?
Yes — it's a well-known, liquid name with established options markets, which is what beginners need.
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