Markets have gotten quite choppy in recent trading sessions. The small-cap Russell 2000 fell 2.26% on Friday to officially enter correction territory. Surging oil and other commodity prices impacted by the effective closure of the Strait of Hormuz as well as a poor February PPI reading pushed the yield on the 10-Year Treasury up to nearly 4.4% this past week.

This was the last thing the moribund housing market needed right now. January new home sales plunged by 11% from January 2025. The median new home sale price fell nearly 7% on a year-over-year basis. Granted, some of the dismal data points were due to lousy weather across a good chunk of the country in January. However, it  should also be noted that mortgage rates have moved up since the opening month of the year.

So, with the Russell 2000 in correction territory and the housing market taking on water, our latest covered call trade idea is a true contrarian play. The bid/ask spread on the options against the equity is a bit wider than I would like, but the premiums are so lucrative the issue is largely moot. 

The name in question is Better Home & Finance (BETR). The company is leveraging its AI-driven platform to disrupt mortgage origination, by performing rapid, cost-efficient approvals and ecosystem integration. By removing the human element, AI can reduce the time for approval answers from weeks to minutes.

The company debuted on the market via a SPAC as a direct-to-consumer fintech. In its original form the company destroyed most shareholder value before pivoting to its current business model. 

Better Home & Finance is morphing from a consumer-centric originator to an industry ecosystem AI platform. It has launched the first conversational credit decision engine for mortgages linked directly into ChatGPT, which radically reduces decision times for loan officers.

The company generated funded loan volume of $4.7 billion in 2025, up over 30% from 2024. It also generates revenue from real estate agent referrals, title insurance, and home insurance policies.

Overall revenue in the fourth quarter was up 77% from the same period a year ago and management is targeting $1 billion in monthly mortgage volume by the end of spring. While unprofitable currently, management has guided that the company will be break even on an adjusted EBITDA basis by the end of the third quarter. Current projections have revenues rising just over 50% in 2026 and 2027, with significant profitability by 2027.

The stock has been hurt by the weakness in small-caps, housing and worries around its warehouse financing facilities given the carnage in the private credit space right now. These factors have led to a decline in the stock of two-thirds from its late October highs. The stock feels like it is trying to find a floor and a beneficial owner has purchased roughly $4 million worth of equity over the past two weeks. 

I can take significant further risk out of my purchase by using covered call orders utilizing call strikes below the current trading levels of the stock as described below. That said, given the confluence of factors, this trade is still only for the risk-tolerant investor.

Option Strategy

Here is how one can establish a position in BETR using a covered call strategy. As a reminder, covered-call orders involve buying an equity and simultaneously selling just out of the money call strikes against the new position.

Selecting the October $25 call strikes, fashion a covered call order with a net debit in the $17.00 to $18.00 a share range (net stock price – option premium). 

This strategy delivers downside protection of just over 35% at the midpoint of this range during the option expiration. It also provides  upside potential of nearly 45% even if the stock trades down 9% over the option duration.

Related: How to Time the Stock Market With Your Own Portfolio

At the time of publication, Jensen was long BETR.