Most traders don’t struggle with covered calls because the strategy is broken. It’s because they start in the wrong place: Scrolling through random tickers, chasing yield, or forcing trades on stocks that don’t belong in an income strategy is how accounts get chopped up quietly over time.
In this clip from options strategist Rick Orford’s latest video, he walks through the exact screening process he uses to narrow the entire market down to high-quality covered call candidates—before ever looking at a chart or strike price.
This is the difference between hoping for a successful income strategy, and proactively engineering it.
Step One: Eliminate Low-Quality Risk at the Source
Rick’s first filter is simple but powerful: market cap.
By setting market cap to $3 billion and above, he immediately removes micro-caps and thinly traded names that tend to:
- Have poor liquidity
- Offer spready options pricing
- Expose sellers to gap risk that premium can’t justify
Covered calls are about repeatability, not lottery outcomes. This filter alone dramatically improves trade quality.
Step Two: Let Implied Volatility Work for You
Next comes implied volatility (IV) — one of the most misunderstood metrics in options trading.
IV doesn’t predict direction. It tells you how much movement the market is pricing in, and that expectation directly determines how much premium you get paid.
Rick filters for 30%-100% implied volatility, targeting stocks where:
- Option premiums are elevated
- Time decay works faster in your favor
- You’re compensated adequately for taking on assignment risk
For covered call sellers, IV isn’t noise; it’s income fuel.
Step Three: Use IV Rank to Confirm Premiums Are Actually Elevated
High IV alone isn’t enough. Covered call sellers need to confirm whether IV is high enough relative to its own historical average range to justify the trade risk.
That’s where IV Rank comes in.
IV Rank measures where current IV stacks up compared to the past year. When IV Rank is elevated, it tells you premiums are higher than usual on a relative basis.
Rick sets IV Rank to 30% and above, stacking probability in favor of:
- Better entry pricing
- Faster premium decay
- More flexibility managing the position
This step prevents you from selling calls when volatility is already crushed.
Step Four: Expand Opportunity with Etfs and Weekly Options
Two final refinements round out Rick’s covered call screening process:
Adding in “ETFs” as a security type. ETFs often provide:
- Cleaner price action
- Broad diversification
- Reduced headline risk relative to single stocks
Including “Weekly options” in Days to Expiration. This expands the opportunity set and allows:
- More frequent income cycles
- Better timing around short-term volatility
- Faster feedback on strategy execution
With these specifications dialed in, Rick is now working from a curated list of stocks that already meet strict income criteria.
Why This Process Matters
The biggest mistake traders make with covered calls is starting with the strike instead of the stock. With this process, Rick flips that logic.
By screening before selecting trades, it's possible to:
- Avoid forcing setups
- Reduce emotional decision-making
- Build a repeatable income workflow
This is how covered calls stop feeling random, and start feeling systematic.
The Takeaway
The secret to success with covered calls isn’t finding more trades; it’s finding better starting conditions.
Rick’s screening process does exactly that, using Barchart’s covered call screener to turn the entire market into a short list of viable income candidates in minutes.
Watch the quick clip to see Rick build the screener step by step:
- Stream Rick’s complete lesson on our official YouTube channel
- Subscribe and turn on notifications so you don’t miss the next options tutorial
On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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