Options & AcuBooth Glossary

The projected premium income from a call, expressed as an annual percentage of the underlying position value. Formula: (Net Credit ÷ Days to Expiration × 365) ÷ Underlying Cost. This is the primary scoring metric Tollbooth uses to compare calls across different expirations and strikes on an apples-to-apples basis.

When the call buyer exercises their right to purchase your shares at the strike price. For covered calls, this is not a loss — you receive the strike price plus all premium collected. In Preserve Equities mode, Tollbooth is specifically designed to minimize assignment probability through delta caps, early rolling, and earnings protection.

A measure of an underlying's average daily price range over a set period. Tollbooth uses the 22-day ATR to determine when a covered call is at meaningful risk — when the underlying is within ATR distance of the strike price. More reliable than fixed percentage thresholds across different underlying volatility profiles.

The difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). Wide bid-ask spreads indicate low liquidity. Tollbooth scores chains partly on bid-ask spread width and avoids placing orders where fills are unlikely or where the spread cost eats into the expected return.

Selling an out-of-the-money put and buying a further out-of-the-money put on the same underlying and expiration. Generates income if the underlying stays flat, rises, or declines only modestly. Maximum loss is capped at the spread width minus the net credit. Does not require owning the underlying. Available on an invite-only institutional basis.

Selling the right for a buyer to purchase your shares at a fixed price (the strike) before a set date (expiration). You collect the premium immediately and keep it regardless of outcome. If the stock stays below the strike, the call expires worthless and you keep the stock and the premium. If the stock rises above the strike, the buyer may exercise and purchase your shares at the strike price — you still keep the premium and sell at the strike.

A number between 0.0 and 1.0 representing the approximate probability that an option expires in the money. A 20-delta call has roughly a 20% probability of expiring in the money. Also measures how much the option price moves per $1 move in the underlying stock. Tollbooth uses delta caps to control assignment risk.

Calendar days until the options contract expires. Tollbooth favors calls expiring 7 to 35 days out (1 to 5 weeks) because they offer the highest annualized return per day of premium collected. This preference for weekly options over monthly is one of the largest contributors to outperformance versus covered call ETFs.

The market's forward-looking expectation of price movement, embedded in option prices. Higher IV means higher option premium — more income available for the covered call seller. Tollbooth captures approximately 15% to 30% of implied volatility as annualized income and prefers to open positions when IV is elevated relative to recent norms.

The sharp drop in implied volatility immediately following an earnings announcement. After earnings, options prices fall quickly because the binary uncertainty has resolved. This reduces the delta of existing calls, often pushing them further out of the money — which benefits covered call holders by reducing assignment risk. Tollbooth's earnings protection logic is designed to take advantage of this effect.

A financial firm that quotes both the buy and sell price on every option chain, providing liquidity to the market. Market makers earn the bid-ask spread. Tollbooth is designed to minimize the "market maker tax" — the cost of buying at the ask and selling at the bid — by placing patient orders above the ask and detecting when market makers are leaning in a particular direction.

Premium received after any costs. On a roll: the premium collected on the new call minus the cost to close the old call. Tollbooth only executes rolls that produce a net credit — meaning the new call's premium exceeds the cost to close the old one. Rolling for a net debit is never permitted.

A secure authorization credential that allows Tollbooth to place orders in a Schwab account without accessing the account's username or password. The investor grants a scoped token — it permits order placement only, not account transfers or other functions. Tokens expire periodically and require re-authorization (prompted on Sunday evenings).

An IRS designation for covered calls that preserves long-term capital gains treatment on the underlying position. Calls must be sufficiently out of the money (the specific threshold depends on the stock price and time to expiration) and must not be for very short-dated expirations. Investors with large long-term embedded gains who want to preserve that tax treatment should discuss qualified covered call parameters with their tax advisor.

Standard brokerage margin rules. For covered calls, Reg T requires owning 100 shares per contract sold. Tollbooth assumes Reg T for all non-institutional accounts — one call per 100 shares owned. A 300-share position can have three simultaneous calls; a 75-share position cannot have any.

Closing an existing call and opening a new one at a different strike and/or expiration. Done to avoid assignment (rolling the call away from the current price), capture new premium (rolling to a fresh expiration), or both. Tollbooth always rolls for a net credit — never a net debit. The system detects when rolling is necessary using ATR-based triggers rather than fixed percentage thresholds.

A portfolio of individual securities managed on behalf of a single investor, as distinct from a pooled fund. AcuBooth (the RIA) delivers covered call overlay execution as an SMA service through Tollbooth — meaning advisors and clients retain direct ownership of their shares. Individual accounts are connected to AcuBooth rather than pooled into a fund structure.

The rate at which an option loses value as expiration approaches. Options sellers benefit from theta — the call they sold becomes cheaper over time, allowing them to close the position at a profit. Theta accelerates as expiration nears, which is why short-dated options capture premium more efficiently per day. This non-linear decay is why Tollbooth prefers weekly options over monthly.