September 21, 2026
Monthly UpdateSeptember 2026: Assigned at $35, Dividend Incoming, and a Tax-Smart Covered Call
SCHD assigned at $35, VTI expires worthless by $0.43, and a masterclass in tax-aware covered call writing.
September was a quieter month by cash-flow standards, but it's the kind of month that matters more than the number suggests. SCHD finally got assigned after four straight rolls, VTI expired worthless by a margin of forty-three cents, and I made a deliberate tax decision on the covered call strike that's worth walking through in detail.
The Numbers
September 1 — The VMFXX Dividend
The money market fund paid out right on schedule: $5,296.65 in VMFXX dividends. With over $1.6M in cash and collateral sitting in the fund through most of August, this was the largest single VMFXX payout of the year so far — cash working hard while the options did their job.
September 18 — Options Expiration
After four straight rolls without ever letting SCHD reach expiration, this cycle finally ran its course.
SCHD closed at $33.68 — well below the $35.00 strike — so all 449 contracts were assigned, putting 44,900 shares in the account. With $0.30/share in premium already collected, my net cost basis comes to $34.70/share.
Against that basis, SCHD closing at $33.68 leaves an unrealized loss of $1.02/share, or $45,798 total. It's worth being precise about what that number is and isn't: it's a paper loss on a position I intend to hold and immediately write calls against, not a realized loss, and it doesn't touch the roughly $220,000 in YTD taxable gains already locked in elsewhere in the portfolio. Getting assigned above the current price is the cost of doing business with the wheel — the premium collected along the way is what makes the math work over a full cycle, not any single strike.
Meanwhile, VTI closed the cycle out clean.
VTI closed at $375.43 — just $0.43 above the $375 strike — so the 11 put contracts expired worthless and I kept the full $4,400 in premium with no assignment. About as close a margin as this strategy sees.
September 21 — New Trades
Today I put both positions back to work, and made a deliberate tax call on the SCHD side.
449 covered call contracts at the $35.00 strike — out-of-the-money against SCHD's $33.68 close — for $0.05 premium, $2,245 collected.
The tax logic behind writing OTM instead of ATM. Under IRS qualified-covered-call and straddle rules, writing a call that's out-of-the-money doesn't suspend the holding period on the underlying shares the way an at-the-money or in-the-money call can. Since I just took assignment on SCHD, keeping this call safely out-of-the-money means the holding-period clock keeps running uninterrupted — so the Q3 SCHD dividend (roughly $11,337.25 on 44,900 shares at ~$0.2525/share) stays taxed at the 15% qualified dividend rate instead of being reclassified as ordinary income at 24%+. That's over $1,000 in avoided tax for accepting a smaller premium today. On a position this size, the tax treatment of the dividend is worth more than chasing an extra few cents of premium.
11 new put contracts at the same $375 strike, $3.00/share premium net of a $1 commission per contract, for $3,300 collected. The $412,500 in required collateral stays parked in VMFXX, earning roughly $1,100/month in interest while it waits.
September Income Summary
| Source | Amount |
|---|---|
| VMFXX dividend (Sept 1) | $5,296.65 |
| VTI puts expired worthless (premium kept) | $4,400.00 |
| SCHD covered calls sold (Sept 21) | $2,245.00 |
| VTI puts sold (Sept 21) | $3,300.00 |
| Total September Income | ~$15,241.65 |
Not counted above: the SCHD Q3 dividend of roughly $11,337.25, expected in late September. It'll land after this post publishes, so it'll show up in October's numbers instead.
Portfolio State (End of September)
Year-to-Date Summary
| Month | Options | Dividends | Total |
|---|---|---|---|
| January | $31,930 | $2,286 | $34,216 |
| February | $12,197 | $0 | $12,197 |
| March | $3,525 | $16,663 | $20,188 |
| April | $7,600 | $0 | $7,600 |
| May | $6,600 | $0 | $6,600 |
| June | $10,130 | $12,246 | $22,376 |
| July | $11,296 | $4,410 | $15,706 |
| August | $45,261 | $4,299 | $49,560 |
| September | $5,545 | $9,697 | $15,242 |
| YTD Total | $134,084 | $49,601 | ~$183,685 |
Just under $183,685 through nine months, still tracking ahead of the $205K gross / $160K net annual target with a quarter of the year left to go.
Looking Ahead: October
October's projected cash flow is shaping up at roughly $17,982.25:
- SCHD Q3 dividend: ~$11,337.25, taxed at the 15% qualified rate
- SCHD covered calls: $2,245.00 already in hand
- VTI puts: $3,300.00 already in hand
- VMFXX interest: ~$1,100
Lessons This Month
1. An unrealized loss at assignment isn't a red flag. Getting assigned SCHD at $34.70 net basis against a $33.68 close is a normal, expected outcome of selling puts — not a sign the strategy is broken. The premium collected across the rolling campaign is what makes the wheel's economics work, not any individual strike relative to the day's price.
2. The strike you pick on a covered call has tax consequences, not just premium consequences. Writing the SCHD call at-the-money instead of $35 would have collected more premium today but risked suspending the holding period and pushing the Q3 dividend into ordinary income — a bad trade even at a higher headline number.
3. Forty-three cents is still a win. VTI expiring worthless by less than fifty cents is a reminder that "textbook" outcomes in this strategy are often razor-thin, and that's fine — the premium is banked the moment the contract is sold, regardless of how close the finish is.
The wheel keeps spinning.
— Russell