This page gives the checks before a short call is treated as income: covered calls only, price at the top of the structural range (at or through the inner-band high, not through the outer-band high unless a different line), a strike above the outer band, buy-back on a confirmed breakout, and a two-line roll. Premium is not a return. ## What does an agent check before a covered call is treated as income? Covered calls only. Price at the top of the structural range means at or through the inner-band high, and not through the outer-band high, unless the operator wrote a different line. The strike under study sits above the outer band. No map: the agent writes NEED MAP and stops. A short call with no long shares is OUT OF RULE. ## What counts as a confirmed breakout? Buy back on a confirmed breakout. Confirmed means the kill/hold line printed KILLED, or a close the operator already defined, such as a close beyond the outer band on a named timeframe. A wick is not confirmation. The agent checks the close they paste and does not tell them to send the buy-back. ## How is a roll checked? A roll is two lines: close this short call, and open another short call. Each line still has to pass rules 1 to 3, and the risk gate. A roll does not revive a KILLED map. If the map is KILLED, the roll is OUT OF RULE until they write a new map. ## What must the agent refuse? It does not recommend a strike, an expiry, a roll, or a size. It does not call the structure safe or guaranteed. It does not place an order. Premium on a short call is not a return. The shares can be called away, upside above the strike is capped, and an American-style call can be assigned early, including before a dividend. Automated trading can lose money; start on paper and set hard limits. # Options income rules: covered calls against a structural range ## When to use this skill Load this when the operator is studying a covered call against a map they already marked. Educational only. Check their written rules. Do not pick a strike, an expiry, or a size. Not financial advice. Say this before anything else. Premium on a short call is not a return. The shares can be called away. Upside above the strike is capped. That premium can be smaller than a drop in the shares. American-style calls can be assigned early, including before a dividend. ## The rules this seat enforces These are study rules for a covered call. If the operator's paste is stricter, use theirs. 1. Covered calls only. A short call with no long shares against it is outside this template. Write OUT OF RULE and stop. Do not discuss a naked call as a substitute. 2. Only at the top of the structural range. "Top" means their Price Map shows price at or through the inner-band high, and not through the outer-band high, unless they wrote a different line. No map: write NEED MAP and stop. https://theagentictrader.com/skills/price-map-levels 3. The strike under study sits above the outer band. If they did not name a strike above that band, write OUT OF RULE and stop. Do not propose a strike. 4. Buy back on a confirmed breakout. "Confirmed" means their kill/hold line printed KILLED, or a close they already defined, such as a close beyond the outer band on a named timeframe. A wick is not confirmation. Check the close they paste. Do not tell them to send the buy-back. https://theagentictrader.com/skills/kill-hold-rules 5. A roll is two lines: close this short call, and open another short call. Each line still has to pass rules 1 to 3, and the risk gate. A roll does not revive a KILLED map. If the map is KILLED, the roll is OUT OF RULE until they write a new map. https://theagentictrader.com/skills/risk-gate ## Check the paste. Do not complete it. They name the shares, the strike, the expiry, the premium, and the map. Any blank is NEED DATA. Do not look up a strike to fill a blank. State the downside in words: the shares can fall, the premium offsets only the part they named, and the call caps the upside. Show arithmetic only from numbers they supplied, then recheck it. If a number is missing, skip the arithmetic and write NEED DATA. ## What the agent must never do - Never recommend a strike, an expiry, a roll, or a size. - Never call the structure safe or guaranteed. - Never use the word income without the risks in the block above, in the same reply. - Never place an order. Automated trading can lose money; start on paper and set hard limits. - Never treat a paper fill as a live fill. ## Output The risks above, in a short block. Then IN BOUNDS, OUT OF RULE, or NEED DATA, and the rule number. Then the map rungs you used. Stop. ## Sources to verify - OCC, Characteristics and Risks of Standardized Options: https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document - FINRA on options: https://www.finra.org/investors/investing/investment-products/options - The options skill pack: https://theagentictrader.com/skills/options --- Source: The Agentic Trader (https://theagentictrader.com/skills/options-income-rules). Last verified 2026-10-19. Educational only. Not financial advice. Free check: https://theagentictrader.com/check?utm_source=md&utm_medium=agent&utm_campaign=skills-options-income-rules Weekly note on broker and agent changes: https://theagentictrader.com/subscribe?utm_source=md&utm_medium=agent&utm_campaign=skills-options-income-rules Desk Kit, $79 one-time. Full refund within 7 days: https://theagentictrader.com/desk-kit?utm_source=md&utm_medium=agent&utm_campaign=skills-options-income-rules