Quarterly Covered Call Options Strategy Using Blue Chip Companies

I built a stock/options model that will green light a trade if the annualized return is >15%.

Let me provide an example

• I buy 100 shares of Walmart at $60 on March 15th, 2024.
• I sell a $55 Covered Call expiring on June 21st, 2024 for a premium of $7.42

(In this example I am selling covered calls quarterly.)

If June 21st rolls around and WMT is >$55, I will sell for a 4.03% gain (($55+7.42)-$60) or a $242 gain on $6,000 in capital. If I were to repeat this quarterly trade over the course of the year, my annualized return should fall around 15% (not including dividends, but if they were included my net annualized return would be greater than 15%)

If June 21st rolls around and WMT is <$55 and I collect $7.42 of premium, I'd effectively cover some of the downside risk associated with the stock by up to ~12.4% ($60 – $7.42). My new cost average would land around $52.58 (again, not including dividends collected over that quarter).

I like this trading strategy as (1) I have a set % gain in mind thats attainable (and its greater than the ~11.4% annualized return of the SP500) (2) I have downside risk coverage and (3) I can own the stock + collect dividends

The downsides I run into are (1) if WMT jumps 25% in that quarter, I'll only walk with a 4.03% gain, which means I leave money on the table, and (2) if WMT drops >12.4%, im in the weeds trying to find another quarterly covered call to trade. I try to hedge that downside risk by choosing large cap, low volatility, blue chip stocks though.

I would only use this strategy on what I determine to be low volatility blue chip stocks that I'd hold for the long term (examples include: GIS, WMT, PG, WM, PEP/KO, BX, etc.). I want to ensure this model works before trying to build something else for higher volatility stocks.

I can change the model at anytime to increase or decrease the 15% annualized return goal if I want to take on more or less risk.

I write all of this out to see if my idea has any missing pieces / holes that can be poked in it. I implemented this in March and have my first round of options expiring 6/21 — all but one company will be getting called away — so 7 / 8 companies will have hit that "annualized return" strategy rendering this trade idea ~87% successful.

Thoughts? Concerns? Things you'd change?