Agree, most stocks go up over time. But most stocks also ebb and flow, very few have a straight up trajectory. So there's a couple strategies I use.
- First, you could buy back the option and keep the stock. I usually will not do that, but depends on the situation.
- Or I could roll the option, basically buying back the and selling another at a longer expiration. Works if there's a sudden pop in the stock and it settles back down.
- But sometimes that doesn't work if stock has really moved, so in that case I'll sell a put at the price I want to pay (prior option strike price most likely). May take a while, and I just keep collecting the premium. If stock never drops, I can buy back the stock and the premiums I collected then help to offset that additional cost.
- Or stock just rockets and I shrug my shoulders, realize I made a decent return and look for the next rocket.
As for being ahead of the game, I use the S&P to benchmark if my individual investing is doing better than it's return, if not, then I should just dump my money into the SPY and call it a day. But for my options, I track my options and determine if I'm ahead of the game if I did nothing (just buy and hold for example). When it's negative, I then know I need to stop doing options.
BTW, doing covered calls has opened me up to some stocks I wouldn't have invested in but trade short term to take advantage of the volatility (and with very short expirations). If those get assigned I'm 100% OK as I only invested in those with an expected assignment and high return. As an example, just last week, $36 stock that I could by a $35 strike and collected $6 premium. Held it for 4 days. Can't complain about $5 net premium on a $30 net investment for under a week. Funny thing is, it closed at $37.26, so I felt good. But this week it popped, trading now at $53. I was still OK as I made this as a trade, wanting it to be called as I was investing some short term cash I had sitting idle. I also sold puts, so did alright on trades of less than a week.