Most traders understand what a covered call is, but far fewer understand when the strategy actually has an edge.

In this clip from his latest YouTube instructional video, options strategist Rick Orford explains how and why he uses two overlooked technical filters inside Barchart’s own Covered Call Screener to consistently surface higher-quality trade candidates — without guessing on direction or chasing after yield.

The key insight is simple but powerful: covered calls work best when momentum has already gotten stretched.

Trading Covered Calls as a Timing Strategy

Covered calls aren’t just about collecting premium. They’re about targeting stocks where upside momentum is more likely to slow than accelerate.

That’s why Rick doesn’t start by looking at yields alone. He starts with the stock’s momentum context, using filters that seek to answer one question:

Has this stock already made its move?

When the answer is “yes,” option premiums are often still elevated — and the odds tilt in favor of the seller.

RSI Rank: A Shortcut to Stretched Momentum

Rick’s first go-to filter within Barchart’s Covered Call Screener is RSI Rank.

RSI (Relative Strength Index) measures recent price momentum on a 0–100 scale. Generally speaking, the data is interpreted as follows:

• Above 70 = overbought
• Below 30 = oversold

RSI Rank takes that concept further by letting you screen for stocks that have recently or currently reached those levels, instead of manually checking charts one by one.

This matters for covered call traders, because when a stock has just experienced a sharp run-up, demand for upside calls increases.

That means implied volatility (IV) tends to rise, and call option premiums are often inflated. As a covered call seller, that’s exactly the volatility backdrop you want.

Rick emphasizes an important nuance here: overbought doesn’t mean the stock is about to crash.

It simply means momentum has already been strong, which often precedes a period of consolidation or slower gains — ideal conditions for time decay to work in your favor as an options seller.

Bollinger Band Rank: A Volatility-Based Alternative

If RSI Rank doesn’t give you enough results — or if you prefer volatility-based signals — Rick suggests filtering by Bollinger Band Rank (BBR).

Bollinger Bands expand and contract based on volatility:

• When volatility rises, bands widen
• When volatility falls, bands tighten

A stock trading near or above its upper Bollinger Band will have a high BBR reading.

For covered calls, that matters because:

• Stocks near the upper band may struggle to push much higher
• Volatility-driven call premiums are often elevated
• Even sideways movement can be profitable

Rick shows how BBR can be used interchangeably with RSI Rank, depending on market conditions and personal preference. It’s the same goal, just viewed through a different lens.

From Screener to Trade in Minutes

Once the momentum filters are applied, Rick narrows results further using:

1. Delta
2. Premium received
3. Probability of profit

Instead of forcing trades, he lets the screener surface pre-qualified setups that already match his criteria.

This is where Barchart’s Option Screener shines. The platform doesn’t just find trades. It organizes decision-making, so traders can focus on risk and structure instead of hunting for ideas.

The Value in This Repeatable Trade Process

The real value in Rick’s approach isn’t the individual trade. It’s the process:

• Identify stretched momentum
• Confirm elevated option pricing
• Select strikes with intention
• Let time decay do the heavy lifting

And because these filters live inside Barchart, the workflow scales across the entire market — not just one ticker.

This is how experienced traders avoid emotional entries and build consistency.

The Takeaway

Covered calls aren’t just about extracting maximum yield. They’re about selling optionality when the market is already leaning too far one way.

By combining RSI Rank or Bollinger Band Rank with Barchart’s Covered Call Screener, Rick shows how to turn this popular income-generating strategy into a disciplined, repeatable system.

If you’re selling covered calls without checking momentum first, you’re leaving edge on the table.

Watch Rick’s quick explainer to learn more: 

• Stream the full lesson on custom covered call screeners
• Start screening for covered calls at Barchart

More news from Barchart

• As Autodesk Slashes Jobs, Should You Buy, Sell, or Hold ADSK Stock?
• As Short Sellers Take Aim at AppLovin Stock Again, How Should You Play APP?
• This Chip Stock Is Trading at New All-Time Highs
• Unusual Options Activity Just Flashed on 3 Stocks: 2 Bull Calls, 1 Bull Put Income Play