Frequently Asked Questions

A covered call pairs stock you already own with a call option you sell on that same stock. You collect premium up front. If the stock stays at or below the strike by expiration, the option expires worthless and you keep both your shares and the premium. If the stock rises above the strike and you're assigned, you sell your shares at the strike price — your upside is capped, while the premium adds a small cushion.

Long call vs. short call

• Long call (you buy a call): You purchase the right, not the obligation, to buy shares at the strike before expiration. Risk is limited to the premium paid; potential upside can be significant if the stock rises. Time decay works against you.
• Short call (you sell a call): You take on the obligation to sell shares at the strike if assigned. You receive premium up front and benefit if the stock is flat or declines. Time decay works in your favor. When the call is "covered," you already own the shares — this caps your upside but avoids the unlimited risk of an uncovered short call.

Market makers vs. retail investors

In most public options trades, a market maker stands on the other side of a retail order. Rather than holding a fixed 100 shares for every call they sell, market makers dynamically hedge — buying or selling only the number of shares needed to offset the option's risk (delta) as prices move. Toll Booth customers typically treat their stock positions as long-term holdings and do not trade shares intraday as a hedge. Selling covered calls in this context is best viewed as monetizing an underutilized asset to seek systematic cash flow via option premium.

One of the less obvious tax dynamics of covered calls comes from rolling. When Toll Booth rolls a covered call — closing the existing short call and opening a new one further out — it collects a net credit overall, but the closing leg is almost always a loss: you buy back the call for more than you originally sold it for. That closing loss is a realized loss for tax purposes, even though the roll as a whole was profitable. Over time, rolling can generate a stream of deductible losses that offset gains elsewhere in your portfolio, all while the strategy continues to produce net income.

This effect is most pronounced on rolls where the underlying stock has moved against you and the call has appreciated significantly — exactly the scenario where the position needs rolling most. The new short call collected on the opening leg is income, but it is typically recognized in a future tax period when that leg eventually closes.

In taxable accounts, covered calls also let you generate income from shares you already own without triggering a sale, deferring any capital gain on the stock itself until you actually want to sell. Tax treatment depends on your specific situation, holding periods, and jurisdiction, and the wash-sale rules can interact with options in complex ways. This is not tax advice; consult a qualified tax professional.

For each underlying, Toll Booth provides several layers of configurability and guardrails.

Percentage of shares covered
You can fine-tune which symbols are eligible for opening covered calls by using a "Do Not Open" list. Any symbol on this list will be excluded from new opening orders.

Target days-to-expiration (DTE) range
Toll Booth uses a research-driven default DTE range. Details: covered-call-selection.

Target delta / moneyness
Each account includes a "Preserve equities" setting. When enabled, Toll Booth adjusts target delta and other selection factors to reduce assignment risk and better preserve the underlying equity exposure.

Profit-taking thresholds
Details: covered-call-closing.

Roll rules
Base rolling logic: covered-call-rolling. Advanced scenarios: rolling scalp/diagonal example.

Yes. Toll Booth includes several guardrails, with a specific philosophy on what truly reflects liquidity and risk.

Minimum option volume / open interest
Toll Booth does not enforce hard minimums on chain volume or open interest. In practice, volume/open interest can be a poor standalone indicator of true liquidity for many underlyings.

Maximum bid/ask spread
Yes. Toll Booth enforces spread-based guardrails and will avoid trades where spreads exceed acceptable thresholds. Details: covered-call-selection.

Maximum contracts per ticker or per account
Toll Booth assumes Reg-T margin and covered options trading approval. Position sizing defaults to 1 covered call per 100 shares of the underlying.

Yes, Toll Booth publishes certain anonymized, aggregate metrics:

• Average annualized premium yield by symbol: tbt.ai/covered-call-symbols
• Assignment frequency: To date, accounts that have enabled the "Preserve equities" setting have had zero short calls assigned.
• Comparison vs. buy-and-hold or covered-call ETFs: This content is being actively developed. In general, Toll Booth's approach — selling weekly calls with opportunistic, rules-based management — tends to outperform covered-call ETFs that sell monthly calls with no active management.

More formal benchmarking content will be published as it is finalized.

Note — Schwab's Automatic Investing service is completely different from Toll Booth.

To enable your account for trading on thinkorswim, try the following steps:

1. Log in to Schwab.com and go to Trade > Trading Platforms.
2. Click Enable trading on thinkorswim.
3. Follow the prompts to select the accounts you would like to enable, then submit your choices.
4. After you submit, your selected accounts will be placed in the processing queue. Processing occurs each night after trading is closed.

For retail accounts, the Schwab API used by Toll Booth does not support granular, per-permission scopes. The API capabilities are:

• Read Positions
• Read Transactions
• Place Orders

The retail API does not provide endpoints for money movement or transfers. Toll Booth cannot move cash; it can only read positions/transactions and place orders when authorized. Your login credentials are never shared with or stored by Toll Booth.

Toll Booth uses multiple layers of validation both before and after orders are sent:

• Pre-trade checks validate that each order matches the intended strategy and account context.
• Post-trade checks regularly review active orders to confirm that the order instructions at Schwab still match what Toll Booth originally submitted.

For example, if Toll Booth submits a rolling order but a conflict is detected, Toll Booth will attempt to detect the mismatch, cancel the affected order, and submit a corrected one.

Additional details: covered-call-opening.

Existing automations: Toll Booth will no longer be able to place new orders on your behalf. All automation that depends on the Schwab API will effectively stop.

Open short call positions: Your existing positions remain in your Schwab account. If you do not manually place closing or rolling orders, those positions will either expire worthless or be assigned, depending on where the underlying is at expiration.

All positions and ultimate outcomes remain under your direct ownership and control at Schwab.

Turn off order placement in Toll Booth:

• Log in to your Toll Booth account.
• Disable the relevant automation/"place orders" settings for the account.
• Once unchecked, Toll Booth will stop submitting new orders.

Change your Schwab password: Changing your Schwab login password automatically invalidates all existing OAuth tokens. This immediately prevents Toll Booth from accessing the API or placing orders.