May 2026
Strategy Deep DiveSCHD Up 18% YTD — Should I Chase or Wait?
With $1.55M to deploy and SCHD at all-time highs, I'm thinking through the decision: buy now or get paid to wait for a pullback?
Here's my situation.
My 48,500 SCHD shares just got called away at $32. I'm sitting on $1.55 million in cash. SCHD is now trading at $32.83 — up almost 18% year-to-date.
The question: Do I buy back in now, or sell puts and wait for a dip?
This is the kind of decision that doesn't have a "right" answer — just tradeoffs. So I'm going to walk through my thinking process in real-time.
The Problem
At $32.83, my $1.55M only buys 47,273 shares. I had 48,500 before. That's 1,227 fewer shares — or about $40K I'd need to add to get back to my original position.
Every share I don't own is a share that doesn't pay dividends or generate covered call premium. Forever.
But here's the thing: SCHD is up 18% in five months. That's an unusually strong year for a dividend ETF. And I keep asking myself the same question:
"Can this really continue? Or am I about to chase a rally and buy at the top?"
The Two Options
- Buy 47,273 shares @ $32.83
- Immediately sell covered calls
- Collect ~$7K/month in CC premium
- Collect dividends starting June
- Risk: SCHD pulls back, I'm "holding bags"
- Sell 485 puts at $32 strike
- Collect ~$2,400-4,800 in put premium
- Earn $4,100/month in money market (3.2%)
- If SCHD dips to $32, I'm assigned at a better price
- Risk: SCHD keeps rallying, I miss the move
Historical Context: Has SCHD Done This Before?
SCHD averages about 12% annually. Being up 18% by May is ahead of schedule. But let's look at history:
| Year | Return | Notes |
|---|---|---|
| 2021 | +29.9% | Post-COVID rally |
| 2019 | +27.0% | Strong bull year |
| 2017 | +18.0% | Similar to current pace |
| 2013 | +30.1% | Outlier year |
| 2022 | -3.2% | Bear market |
| 2023 | +3.7% | Recovery year |
SCHD has had 20%+ years before. It's rare, but it happens. Those years also had pullbacks — they just kept going afterward.
A 2.5% dip from $32.83 to $32 is a completely normal correction, even in a bull year.
The Income Math
If I Buy Now + Sell Covered Calls:
| Source | Monthly | Annual |
|---|---|---|
| Dividends (47,273 × $1.08 / 12) | $4,255 | $51,060 |
| Covered calls (~$0.15 × 472 contracts) | $7,080 | $84,960 |
| Total | $11,335 | $136,020 |
If I Sell Puts + Wait:
| Source | Monthly | Annual |
|---|---|---|
| Money market (3.2% on $1.55M) | $4,139 | $49,670 |
| Put premium (~$0.10 × 485 contracts) | $4,850 | $58,200 |
| Total | $8,989 | $107,870 |
The gap is about $2,350/month — or $28K annually. Buying now generates more income.
But here's the thing: if SCHD pulls back 5% and I get assigned at $32, I get all 48,500 shares back (not just 47,273). That extra 1,227 shares would add ~$1,320/year in dividends forever.
Scenario Modeling
Scenario A: SCHD Pulls Back 5%
What happens: SCHD drops to ~$31.19. My $32 puts get assigned.
Result: I own 48,500 shares at $32 — same number I had before. Plus I collected put premium and money market interest while waiting.
Outcome: WIN. I bought the dip instead of chasing the rally.
Scenario B: SCHD Rallies Another 10%
What happens: SCHD goes to $36.11. My $32 puts expire worthless.
Result: I'm still sitting on $1.55M cash. I missed ~$155K in appreciation.
Outcome: MISS. But I still have my capital. I can sell $34 puts next month and eventually get assigned at a higher price.
Scenario C: SCHD Goes Sideways
What happens: SCHD bounces between $32-34 for 3 months.
Result: Maybe I get assigned in month 3 when it dips to $32. I earned ~$27K in money market + put premium while waiting.
Outcome: WIN. Patient money won.
The Probability Question
Based on SCHD being up 18% YTD already, here's how I assess the scenarios:
By my math, there's a 70-80% chance I eventually get assigned at $32 or lower if I wait. A 20-30% chance I miss a monster rally.
The Regret Minimization Question
Which regret can I live with?
| If I... | And SCHD... | I'll feel... |
|---|---|---|
| Buy now | Drops 10% | "I chased. I'm holding bags at the top." |
| Buy now | Rallies 10% | "Good call. Glad I got in." |
| Sell puts | Drops 5% | "Nailed it. Got all my shares back at $32." |
| Sell puts | Rallies 20% | "Missed it. But I still have $1.55M." |
The key insight: the put strategy doesn't lose. It might just win less.
Even worst case — SCHD goes to $36 — I still have $1.55M. I sell $34 puts. Eventually I get assigned at $34, owning 45,647 shares. Not as good as 48,500, but not zero.
My Thesis
SCHD up 18% in five months is unsustainable. That doesn't mean it'll crash — it means a pullback is normal and healthy. Even bull years have 8-12% drawdowns along the way.
I'd rather buy low than chase high.
The money market pays me $4,100/month to wait. Put premium adds another $2,400-4,800. I'm earning $6,500-9,000/month in "patience income" while I wait for a better entry.
If the pullback comes, I'm a genius. If it doesn't, I deploy at higher prices — but I still have capital.
What Could Go Wrong
I want to be honest about the risks I'm accepting:
- SCHD rallies to $36+: I miss the move, buy back at higher prices, own fewer shares forever
- Low IV persists: Put premiums stay thin at $0.05-0.10
- Opportunity cost: The $2,350/month gap adds up over time
- I'm wrong about the pullback: Markets can stay irrational longer than I can stay patient
But here's what I believe: after a 18% YTD run, some consolidation is likely. And the wheel strategy is built for exactly this moment — getting paid to wait for better prices.
"The put strategy doesn't lose. It might just win less. I'm betting on a pullback — and earning 3.2% in the meantime."
Next Steps
Here's my plan for June:
- SCHD: Sell 485 contracts of $32 puts for June expiration. Collect whatever premium the market gives me.
- VTI: Already have $360 puts open. If assigned, I'll sell covered calls immediately.
- Cash: Everything else stays in VMFXX at 3.2%.
- Dividends: Watch for SCHD ex-date (likely June 25). If my puts get assigned around June 18, I'll own shares before ex-date and collect the dividend.
I'll report back next month on how it plays out. Either I'll be celebrating a well-timed entry, or I'll be explaining why I'm selling $33 puts instead.
The wheel keeps turning.
— Russell