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Ask Alan – Covered Call Writing: The Rolling Out Exit Strategy

Alan answers a question from Manohar of Alpharetta, GA. Manohar asks, "I’m beginning to get the hang of these options thanks to your education series. I have a question on rolling options. What criteria, timing and strikes, do you use when rolling out? Specifically, do you roll out a week before the expiration date? And, is there any time when a certain other criteria should become apparent; and if so, which ones? And, finally, do we roll out until we find an expiration date and strike price that will result in a net credit?"

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About Alan Ellman

Alan Ellman loves options trading so much he has written three top selling books on the topic of selling covered calls alone. He is a recently retired dentist, a personal trainer, successful real estate investor, but he is known mostly for his profound stock option strategies.

5 Responses to “Ask Alan – Covered Call Writing: The Rolling Out Exit Strategy”

  1. Sara October 4, 2012 6:41 am #

    Alan,

    Do you ever roll out more than one month and if you do what are the criteria you use for that decision. Thanks.

    Sara

    • Alan Ellman October 4, 2012 5:38 pm #

      Sara,

      I will almost never go out more than 1 month because the math says we make more money selling 1 month options. I also avoid earnings reports which, as you know, are published quarterly. Here is a link to an article I published which gives more details:

      http://www.thebluecollarinvestor.com/the-case-for-1-month-options-2/

      Alan

  2. Alan Ellman October 4, 2012 5:12 pm #

    Premium members:

    This week’s 6-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site.

    For your convenience, here is the link to login to the premium site:

    http://www.thebluecollarinvestor.com/member/login.php

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    http://www.thebluecollarinvestor.com/membership.shtml

    Alan and the BCI team

  3. Henry October 5, 2012 8:00 am #

    Allan,

    In one of your videos you say that you can use a stock after the earnings passes. What rules do you use to decide if the stock is still good after earnings? I’ve learned a lot from those videos thanks a lot.

    Henry

    • Alan Ellman October 5, 2012 11:33 am #

      Henry,

      Here is a brief summary of the post-ER guidelines:

      1- Let the price settle if any ER surprise

      2- Check to make sure the security still meets the BCI system requirements

      3- If yes, check the calculations to make sure they meet your financial goals

      4- If yes, start generating those profits!

      Alan

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