Sometimes it’s better to wait before making your next move.
When trading covered calls, we often buy back the call option
after its price
drops to lock in a profit. When trading the stock itself, we
usually sell shares
after the price goes up.
In both cases, acting too soon can hurt your results. If you
buy back the option
before the price drops—or sell the stock before the price
rises—you might miss
out on the gains.
That’s why this strategy includes a planned wait time before
taking action.
We call this wait time \(T_{wait}\).