If you only ever make up your mind to rebalance today, and with no pre-determined plan for the future, you're right you can't get paid anything for that via options. However, if like many BHs, you have a plan in advance for rebalancing if markets rise/fall by say 5%, then you can sell 5% out of the money options and get paid for that willingness to buy stocks if they fall and sell them if they rise. Better yet, you can get paid even if that doesn't happen!
There are a couple problems with this - if you are talking about selling out-of-the-money calls, as it appears you are.
a) unless you are trading on margin, you would need to keep enough cash as collateral to purchase at the strike price when you sell the call
b) your collateral money won't be earning anything - no interest, dividends, etc
c) the most you can win in this transaction is you get to keep the option premium. That may be relatively small, for out of the money options. But this depends on volatility and expiration date of the option.
d) if stocks fall below your strike price, for example, at expiration, you still have to buy the stock at the strike price you originally chose.
For example, you sold a call at 5% out of the money, but market drops 7% at expiration. Now you have to buy at 2% above current price.
Of course, you could also buy the call back at any time before expiration, but doing so will be more expensive if the call has gone from out-of-the-money to in-the-money. You will lose money on your option trade, in that case, and potentially lose more than if you had invested your collateral in the index instead.
Ie. there is still potential for you to lose in this option selling transaction. If there wasn't such potential, nobody else would take the other side of the bet.
For out of the money covered calls you have this confused.
a) if calls are covered, by definition there's no margin required
b) same point
c) true relatively small, but as opposed to zero for a strict rebalancing rule with no option
d) I don't get this at all. The case you mentioned would be to sell call out of the money to 'monetize' the rebalancing rule. If the stock doesn't end above the rebalancing level ie the option strike, the option isn't exercised, and nothing else happens either. You don't have to buy any stock, unless the stock ends up below your rebalancing level on the downside, in which case if you just sold a covered call and no put, you just buy to rebalance as normal; the call has no effect in that case except having received the premium.
The actual relationship of option selling to rebalancing is this. Assume your rebalancing rule is set in advance to sell/buy a certain amount of stock at given prices. This should be the case for a normal rebalancing rule. You can model what your equity % would be at given prices, give or take the effect of the non-equity proportion also changing in value in those cases, but that should be a relatively minor effect. Then derive how many shares that would equate to buy/sell of a particular index ETF at that price to rebalance. If your rule is set in stone that way, the option does basically 'monetize' it.
Beisdes the potential effect of non-stock movement on your equity %, the other mismatch is this: if you don't sell the option, you just sell the shares of the ETF to rebalance whenever the price reaches the rebalancing level. If you sell the option struck at the rebalancing level, you only end up selling the shares, basically*, if the ETF share price is above the rebalancing level at the end of the option period. Historical analysis could give you an idea how much difference that typically makes for relatively short option periods: not much.
For selling puts, which would be naked, there's more of a margin issue, unless you have a broker who allows naked puts on the index futures at reasonable margin. Interactive Brokers long did, but is now changing their policy.
In summary for covered call selling, it does not make sense if based on no particular desire to sell at the strike but just 'hoping' the options don't get exercised so you can make a little more return. Assuming you reject the first idea as naive but still have no rebalancing rule (perhaps if 100% equities) it's debatable whether covered call selling has a favorable effect on risk v return: for covered at-the-money calls it has been favorable over long periods, significantly higher Sharpe Ratio than the underlying, though not always and no gtee for the future, like any persistent anomaly; for out-of-the-money calls it's more doubtful. However under a rebalancing rule, if you already assume you'd sell shares at a given higher than current price, only subject to the slight mismatch mentioned, monetizing that with a covered call is a more interesting idea IMO.
*In general the option is 'worth more alive than dead' to the party you sell it to, so if the ETF price goes above the strike during the period but ends below the strike, they will generally be rational not to have exercised the option. Dividends during the period could affect that since the option will be (US exchanged traded options are) excercisable in theory at any time. But for options on the index itself itself or on futures the option shouldn't and won't be exercised unless above the strike *at expiry* of the option.