Thanks. My interest is IB not to liquidate my positions. Stocks like SPY,IWM,QQQQ will come back up again. I hope!
There is no simple answer like "...do this to protect your covered call position" as there are many factors that affect what can be done and how it should be done. To give you an example. Rather than doing covered calls you may want to look at buying vertical call spreads (i.e. essentially substituting long stock with a long call). This gives you limited risk. A variation of this would be to buy a diagonal spread. That is, buying a call option with a longer expiration and then selling shorter term calls, which again limits your risk. Another possibility is selling put verticals. That is, as it has been mentioned previously, a covered call is synthetically equivalent to a short put at the same strike price as the call. So you can sell a put at the strike you would've otherwise sold a call and then buy a lower strike put to protect your downside. If it's easier for you to visualize, then you can think of this as doing your regular covered call trade and then buying a put option below for protection.
I would like to update my performance for first two weeks of October, trading weekly covered calls. I have achieved 1% per week on my equity with IB. First two weeks were good as markets were going up. This may not be achieved over the whole year. I donot mind spending 0.1 to 0.2 % of my income for protection. Thanks to MTE for some ideas. I only use ETFs for this weekly trading. The fear is there that sometime I will give back my profits built over the year and I am looking for some simple solution to protect my account. Thanks.