Managed Covered Calls for Tech-Professionals
Designed to pursue income from concentrated stock positions while working toward gradual diversification, with a focus on tax-aware execution.
The Concentration Problem
Income Generation
Designed to generate premium income on existing holdings, with potential yield varying based on market conditions and strategy selection.
Systematic Diversification
When shares are called away, capital is redeployed into a diversified portfolio of holdings designed to reduce concentration risk.
Managed Covered Calls
Premiums collected may partially offset declines in share value, though they do not eliminate downside risk or guarantee positive returns.
Tax-Aware
Coordinate the timing of covered call sales with tax loss harvesting and QSBS strategies to help manage your overall tax exposure.
You’ve built significant wealth in company stock, through options, RSUs, or ESPP, but much of your net worth is now concentrated. Selling outright can trigger substantial capital gains taxes, leaving you stuck between risk and tax inefficiency.
Our managed covered call strategy is designed to help you navigate that tradeoff, generating income while gradually reducing concentration risk. We actively manage strike selection, timing, and roll decisions based on market conditions and your tax situation.
When our Covered Call Service Makes Sense
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You have concentrated stock exposure
You hold 20% or more of your net worth in a single position, whether from RSUs, ISOs, or a liquidity event, and are looking for a structured approach to managing that risk.
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You want to reduce concentration risk
You know it's time to diversify, but selling your entire position at once would trigger significant capital gains taxes, so you need a more gradual, tax-conscious approach.
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Your company stock is publicly traded
Your holdings are in a publicly traded company with liquid options markets, such as a FAANG or major public tech company, making a covered call strategy viable and effective.
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You're willing to cap upside for income + diversification
You prioritize reducing risk and generating income over capturing unlimited upside, and you're comfortable with a strategy that may limit gains.
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Your time horizon is 2-5 years
You're looking at a multi-year window, long enough to systematically diversify your position, but short enough to stay actively engaged.
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You want professional management
Rather than managing strike prices, rolls, and assignment decisions yourself, you'd prefer to work with a professional who handles the complexity.
How We Actively Manage Your Position
Strike Selection
We select strikes based on your diversification timeline, tax situation, and upside willingness. Want to keep more upside? Higher strikes. Ready to diversify faster? Lower strikes.
Roll Management
When positions move against you, we carefully evaluate roll decisions vs. assignment based on market conditions, volatility levels, and your concentration goals.
Tax Coordination
We proactively coordinate call assignments with tax-loss harvesting opportunities, QSBS holding periods, and state tax planning to support tax-efficient outcomes.
Our Covered Calls Strategy
Each strategy has different weighted call probabilities, meaning that they each represent different speeds of diversification. Our strategies are a starting point and can be customized to your needs with the help of your Advisor.
Conservative
Target of 10% chance overall that all your shares will be called, or sold, in a 45 to 90-day cycle.
There is a 5% - 15% chance that any one batch (100 shares) could be called. This strategy optimizes for maximum share price upside.
Moderate
Target of 20% chance overall that all your shares will be called in a 45 to 90-day cycle.
There is a 10% - 30% chance that any one batch could be called. This strategy balances income and flexibility while steadily diversifying.
Aggressive
Target of 30% chance overall that all your shares will be called, in a 45 to 90-day cycle.
There is a 20% - 40% chance that any one batch could be called. This strategy is structured to pursue higher income generation and a faster diversification pace, with higher assignment probability.
DiversiFi may close options contracts early if the value of the options has dropped considerably (i.e., at a profit) and there is still significant time to maturity. This may allow for new contracts to be sold sooner, with the potential to collect additional premiums. Outcomes will vary based on market conditions.
Pricing & Fees
Our Covered Calls service is a subset of our Wealth Management Offering and utilizes the same pricing model. For Covered Calls, there is an additional brokerage transaction fee of $0.65 per options contract (1 options contract = 100 shares).
| Total Assets Under Management | Annual Fee Rate |
|---|---|
| $50,000 – $499,999 | 1.20% |
| $500,000 – $999,999 | 1.00% |
| $1,000,000 – $4,999,999 | 0.80% |
| $5,000,000 – $14,999,999 | 0.60% |
| $15,000,000 - $34,999,999 | 0.45% |
| $35,000,000 and above | 0.35% |
These are not costs associated with opening or closing an account at Charles Schwab. Transfer fees may be associated with the delivering firm during the transfer of shares process.
Eligibility Requirements
✓ Minimum investment amount of $100,000 and at least 300 shares,
✓ The total number of shares must be a multiple of 100 to be eligible for the Covered Calls service (contracts can only written in multiples of 100 shares).
✓ The ability for shares to remain in the strategy for a minimum of 90 days.
✓ Shares must be transferred to Charles Schwab. We do not manage assets outside of Schwab. Similarly, do not transfer over any shares that you do not wish to be part of a covered call strategy.
✓ Maintain 0.5% of the total account balance as cash to cover management fees. This may result in the first set of premiums being withheld from reinvestment.
✓ The company must pass DiversiFi’s viability analysis to ensure:
Options market liquidity,
The company has a favorable financial condition and trajectory, and
The stock is reasonably priced in the market
