My take on cash-secured puts (CSP) versus covered calls (CC)

I had a question about cash-secured puts (CSP) versus covered calls (CC) and figured I'd answer it here instead. Sorry if I ramble a bit.

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The dividend plays I do are based on the ex-dividend events of Dividend Champions. Assumptions I make:

1. CSP and CC at the same strike price have about the same risk and reward.
2. The equity price will drop by the amount of the dividend as it goes ex-dividend.
3. The strike price sets a limit on the profitability of a CSP or CC.
4. Maximum extrinsic value is usually found at or near the current equity price.
5. Maximum extrinsic value (per day) is usually found at the nearest expiration dates.
6. Dividend amounts are unlikely to be cut.
7. A price above the strike price at expiration leads to three transactions for a CC, but only one on a CSP, both ending with the positions closed.
8. A price below the strike price at expiration leads to two transactions for both a CC and a CSP, both ending in ownership of shares having the same value.
9. All my trading is in IRAs, so I have no tax or margin considerations.

That leads me to a number of conclusions:

1. A#7 and A#8 mean the CSP is more efficient than the CC, transaction-wise. 
2. A#1 means the extrinsic value for CSP and CC are close. This assumption may be false leading up to an ex-dividend event. See this. This is something I want to take a closer look at.
3. A#2 means the equity price will be more likely to be less than the strike price at expiration, possibly resulting in A#8.
4. A#2 and A#3 means the CC has more profit potential than the CSP, because the dividend can drop the equity price under the strike price, allowing for more profit if the equity price runs up to the strike price. That means A#1 should be false, as the CSP would need to account for this difference.
5. A#2 means the call can be exercised early. And this may be the loophole for A#1, because the CC/CSP equity is based on the expiration date. But an early exercise of a put is almost inconceivable.
6. A#2 means the price of the options must change going ex-dividend, as the underlying equity has a different value when it goes ex-dividend. The same option prices cannot be correct both before and after the dividend is paid.
7. A#4 and A#5 are why I choose generally choose first ITM or first OTM strike prices, for the expiration date immediately following the ex-dividend date.
8. A#5 is why I generally use the equities with weekly options. Also, they are generally more liquid.
9. A#6 gives me more leeway on a price decline. It's also taught me I can be patient. If I don't like the current bid of $0.50 on a call, I just put in a limit price of $0.80 (or whatever) and wait. The dividends I collect would be more than the cash in my account would have earned.

So, C#1 is an advantage for the CSP. C#4 and C#5 are advantages for the CC. The big question is the validity of A#1 when the ex-dividend event gets involved. In the end, I found I am more comfortable with the CC than the CSP.