Brian Lee
Jul 26, 2025
The relationship between the underlying spot price, \(UP_{spot}\), and the price of a covered call option is largely governed by option delta. When \(UP_{spot}\) rises, the call’s delta tends to increase, pushing the option price higher. When \(UP_{spot}\) falls, delta decreases and the option price drops.
This simplified view ignores other option Greeks, but for weekly covered calls the impact of those factors is small. By tracking \(UP_{spot}\) and delta (see Option Delta), you can anticipate how the option’s price will react to movements in the underlying stock.