ALERT: ZScaler - The Covered Call Strategy That Could Make You Rich

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Navigating the stock market can be overwhelming, especially with its unpredictability. However, by applying the right strategies, like covered calls, you can generate consistent income. In this blog, we will break down how Mark Yegge leverages covered calls using ZScaler (ZS) to maximize returns in a green market.

Why ZScaler?

ZScaler, a leader in cybersecurity, has shown significant growth with:

74% Earnings Growth Rate
47% Return on Equity
Minimal Debt

Despite the company's strong financials, the stock has been consolidating. This creates a lucrative opportunity to apply the covered call strategy.

The Covered Call Strategy Explained

A covered call involves owning a stock (or using a synthetic stock position) and selling call options against it to generate income. This strategy is particularly effective in stable or slightly bullish markets.

Step 1: Establish a Synthetic Position

Instead of buying actual shares, Mark uses deep in-the-money calls as synthetic stocks. This method requires less capital while providing nearly the same exposure. For example, he purchased 5 contracts of ZScaler’s 135 calls, expiring in March 2026, with an 89 Delta — meaning it moves almost in line with the stock price.

Step 2: Sell Covered Calls

Once the synthetic position is established, the next step is to sell covered calls. Mark chose to sell calls at a strike price of $210 for two weeks out, collecting $437 per contract. With 5 contracts, that’s a total of $2,185 in premium income.

Step 3: Adjust and Repeat

Each week, Mark assesses the market and rolls the calls to the next week, generating additional income while managing risks.

Benefits of This Strategy

Income Generation: Regardless of whether the stock moves up, down, or sideways, the premium from selling calls provides reliable income.
Lower Capital Requirement: Using synthetic stocks reduces the investment needed compared to buying actual shares.
Built-in Downside Protection: The premiums collected act as a buffer against minor losses.
No Need to Predict the Market: Mark focuses on probabilities, not predictions, making this a stress-free trading approach.

Life Improving Tips

Use Your Money Efficiently: Instead of tying up significant capital in stocks, consider synthetic options for the same exposure with lower costs.
Generate Passive Income: Selling covered calls regularly can provide consistent income, supporting your lifestyle or funding other investments.
Stay Calm in Volatile Markets: With this strategy, market volatility becomes an advantage. Even in uncertain conditions, you can earn income.
Learn and Adapt: Continuously refine your trading plan. Track your results and adjust as needed to maximize returns.
Apply Risk Management: Establish circuit breakers — predetermined points where you’ll exit a trade to prevent substantial losses.

FAQs

What is a synthetic stock position?
A synthetic stock is created using deep in-the-money call options. It mimics the movement of the underlying stock without requiring the same capital investment.
How much capital is needed for this strategy?
Mark invested around $42,000 for his initial synthetic position. However, the actual capital required depends on the stock price and the option's delta.
What if the stock moves against me?
The premiums collected from selling calls provide downside protection. Additionally, circuit breakers can be implemented to limit losses.
Can beginners apply this strategy?
While the strategy may seem complex, with proper education and guidance, beginners can effectively implement covered calls using synthetic stocks.
How often should I roll my calls?
Typically, Mark rolls his calls weekly or biweekly, depending on the market conditions and his goals.

Call to Action

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Conclusion

The covered call strategy on ZScaler exemplifies how investors can generate reliable income without relying solely on stock price appreciation. By using synthetic stocks and consistently selling covered calls, you can achieve consistent returns even in unpredictable markets.

Whether you’re a seasoned investor or just starting out, applying this strategy can help you build wealth and create financial freedom.

ALERT: ZScaler - The Covered Call Strategy That Could Make You Rich

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