Anyway, I can't go far wrong here. Either we get another 2 years of roaring market, I make about $160,000 in profit and pay $50,000 or so in tax or we get a flat market and I pocket all of the covered call premiums and pay no tax. The last case in which the market drops I am 5% ahead of every buy and hold investor.
This is the bit that I get confused about. Can you give your example, such as, if AAPL doubles from $500, the option is exercised in 2016 at $1,000 per share. The 100 share position worth $100,000 is then handed over to the call buyer, which originally cost $50,000 and got an additional 10% premium for selling the calls, so an additional $5,000. You are right that you made $55,000 (minus the initial stock purchase price), but someone else made $50,000 increase by paying $5,000 for the call.
Also, if the stock is cut in half while you are holding it, you end up losing money at some point, except I guess you say that you are buy and hold which exempts this from bothering you. But what if AAPL starts diluting shareholders by issuing new shares or replaces the CEO? Ultimately, when a stock is crashing, it's nice to have a stop-loss order somewhere above your buy in, or be able to sell half at market if rumors look likely to become news...
I hope that AAPL stays flat until 2016, or when it goes up you buy some cheap puts, but this is why I stay out of fancy-pants investing. Way too much time and risk (and associated timing and emotion), but I'll probably get some fun money back into trying to exploit Black-Sholes on my holdings someday, I always did prefer to take part in the sophistication that lead up to a financial bubble/collapse, as opposed to being an innocent bystander.