ULTA Poor Man's Covered Call: Strike Selection, Premium & Risk
How to sell poor man's covered calls on Ulta Beauty — optimal strikes, expected premium, and the risks that actually matter for a mid-cap consumer discretionary name.
Is ULTA a good poor man's covered call candidate?
ULTA (Ulta Beauty) is a mid-cap consumer discretionary name with a mid-range share price and good options liquidity. Implied volatility is moderate — enough premium to make selling options worthwhile, without the heart-stopping price swings you get on speculative names. It pays no dividend, so every dollar of income must come from the options you sell.
Strike selection for a ULTA poor man's covered call
For a ULTA PMCC, buy a long-dated call with 0.80+ delta (typically 12-18 months out) as your synthetic long, then sell short-dated calls 5-8% above the stock price at 0.20-0.30 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 ULTA.
Expected premium and income on ULTA
Typical monthly premium collected on ULTA runs around 1.0-2.0% of capital, which annualizes to roughly 12-24% if you sell new contracts every cycle. Capital required to run a single contract wheel on ULTA is $5,000-$20,000 — the share price and the 100-share lot size set the minimum, not the strategy.
Risk management for ULTA 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. ULTA moves in a moderate-volatility range most of the time, but earnings week and sector rotations can still produce 5%+ single-day prints. Consumer discretionary is tightly coupled to retail sales and consumer sentiment data; miss on guidance and the stock can drop 15%+ in a session.
ULTA Poor Man's Covered Call FAQ
Can you run a poor man's covered call on ULTA?
Yes. Buy a 0.80+ delta LEAPS on ULTA dated 12-18 months out as your synthetic long, then sell short-dated calls 5-8% above the stock at 0.20-0.30 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 ULTA poor man's covered call trades?
Use 30-45 DTE as a default for ULTA. This is the classic theta sweet spot and works well on a stable ticker like this.
Is ULTA suitable for beginners selling options?
Mostly yes, though beginners should use small size and confirm liquidity on each expiration they trade. Always check the bid/ask spread before entering — anything wider than 5% of the mid price is a warning sign.
Related ULTA strategies
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