In practice, it doesn't work like that. Because you have to sell enough covered calls to cover your tax bill with just the premiums in case the share price doesn't rise past the strike price.
It's unclear if you're talking about the sell-far-OTM ones or the margin and sell very close to ITM ones here... those are two, somewhat different, things I described.
It SOUNDS like you are disussing the second because you mention "in case it doesn't rise past strike" which is only a thing you want with the second method.
And in practice it works just as I describe- because I've done it for quite a while and it works fine.
You
do not "need" it to rise past the strike.... that just makes it faster.
The premium, by selling very close to current price, is already the majority of your profit.
As illustrated in the example I gave.
3/5ths of the profit was the premium- not the profit from exercise.
3k per week, for the roughly 16 weeks he could have available to him, would raise $48,000 if the stock just sat still and
never rose a few bucks into exercising.
If it ever does, he just gets there faster.
And if he has enough margin to do 2 of them a week instead of 1 you double it. (or more, depending on free margin).
But if it does, then you have sold far more shares than you needed to
Again, with the margin method these are shares you only bought to make premium on, not to hold.
You're using the brokers money to earn premium- not yours.
It lets you avoid selling
any of your core shares you were trying to AVOID selling to cover the tax bill.
. And the higher the strike you choose (in order to minimize the chances of the shares being called) they more shares you lose if they are called (because the premium is smaller and you need to sell more of them to pay your tax bill).
Now you seem to have swapped back to discussing the first method (selling far OTMs).
Again this will depend on the # of shares he has, and the amount of the tax bill to be able to determine if you can sell enough CCs, far enough OTM to have virtually no chance of exercising in a week, over the ~16 weeks he's got, to cover the bill or not.
We don't have that info to really judge.
If it's a $50,000 tax bill and he only has 300 shares- that idea isn't going to work at all. (the margin idea potentially could though).
If it's a $10,000 tax bill and he's got 3000 shares it'd be very easy to just sell 50% weekly OTM calls on some of them and easily pay the bill with risk being exceedingly low- as the SP would need to not just go up 50% in one week (which is not a 0% chance, but damn close) it'd need to go up
more than 50%- in a single week- to actually lose anything.
All you have done is traded the CHANCE to not have to sell any shares for the CHANCE that you might have to sell many times more shares than had you simply sold the amount necessary to cover your taxes.
There are no free lunches in this game.
There aren't.
But
what those chances of each are makes a huge difference.
A 100% chance of needing to sell 10 shares, versus a 2% chance of needing to sell 100 for example.