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I have been selling covered calls for income for a while now. Lately, with the market relentlessly trending upward, I find myself getting poor results with this strategy, since I frequently find myself facing the choice of either letting my stocks be called away or buying back the calls at a hefty price (basically, the intrinsic value of the option.)

So, I have a couple of questions for the community.

1) Is it stupid to sell covered calls in an upwardly trending market or do I just need to adjust my strike prices higher to try to avoid this situation?

2) How do you decide whether or not to buy back your calls or to let your stocks be called away?

3) When do you buy them back? Is it ever the case that extrinsic values rise the day or two before expiration to the disadvantage of people who want to close out their short call positions?

I have a couple of positions which are $6 - 10 in the hole at this point and expiration is approaching. That means, I lost all the gain over the strike price in order to obtain a few percentage points of gain from the declining time value of the options. Not a good trade - and I am loath to kick the can down the road (unlike Congress, which loves that strategy.)

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