Overlapping Covered Calls and Poor Risk Management: Lessons from ASTS/UNH Trading Scenarios

This analysis is based on a retail trader’s experience with overlapping covered call positions in AST SpaceMobile (ASTS) and UnitedHealth Group (UNH), amplified by ASTS’s dramatic 230% price rally from June to December 2025 [0].

ASTS, a high-volatility satellite communications stock (5-year beta = 2.76 [1]), rallied from $22.98 to $75.84 (peaking at $102.79) driven by regulatory milestones, successful satellite test calls, and telecom partnership announcements [5]. In contrast, UNH is a large-cap managed healthcare stock (market cap ~$468B [2]) with low volatility (daily standard deviation = 2.35% [0]) and a high per-share price (~$300-$380 in 2025 [0]), requiring ~$30k-$38k in capital for 100-share covered call positions [0].

The trader held multiple UNH covered calls, tying up ~$150k-$190k in capital. When ASTS rallied unexpectedly, the trader lacked the capital reserves to adjust their ASTS covered calls (e.g., rolling up/out or buying back options), resulting in ASTS shares being assigned at a low strike price (e.g., $50). This led to significant opportunity costs, as the trader missed ASTS’s peak price of $102.79 [0]. These opportunity costs compound over time, as the trader cannot reinvest the missed gains into future high-growth opportunities [3].

1. Opportunity Costs as Compounding Losses
   : For high-volatility stocks like ASTS, the opportunity cost of missed upside due to covered calls can be as damaging as direct capital losses due to compounding drag [3].
2. Capital Allocation Trade-Offs
   : Overallocating capital to high-priced low-volatility stocks (like UNH) restricts flexibility in managing positions in high-upside volatile stocks, particularly during unexpected rallies.
3. Regulatory and Event Risks
   : ASTS’s rally was event-driven (regulatory milestones, partnerships), highlighting the need for traders to monitor company-specific events for stocks in their covered call portfolios to avoid being caught off guard [5].

• Capital Constraint Risk
  : Insufficient capital reserves limit a trader’s ability to adjust positions during market moves, leading to missed upside or unintended stock assignments [0].
• Strategy Misalignment Risk
  : Using covered calls (which limit upside) on high-volatility, high-growth stocks like ASTS exposes traders to significant opportunity costs [3].
• Event Blind Spot Risk
  : Failing to track company announcements for covered call stocks increases the likelihood of being unprepared for sharp price swings [5].

• Position Sizing
  : Avoid overallocating capital to high-priced stocks to maintain flexibility for managing volatile positions [0].
• Capital Reserves
  : Maintain 10-20% of portfolio capital as reserves to adjust positions during unexpected market moves [0].
• Volatility Matching
  : Deploy covered calls on low-volatility, stable stocks (like UNH) and use alternative strategies (e.g., long calls) for high-volatility stocks with significant upside potential [3].

This analysis provides an objective overview of the risks associated with overlapping covered call positions and poor capital management, using the ASTS/UNH scenario as a case study. Key data points include ASTS’s 230% rally (June-December 2025) [0], UNH’s high capital requirement per 100 shares (~$30k-$38k) [0], and the compounding nature of opportunity costs [3]. The analysis emphasizes actionable lessons for retail traders to improve their risk management practices, but does not provide specific investment recommendations.