beginners corner

Blog

Selling call and put options

When Do We Sell Our Covered Call Writing Stocks?

Covered call writers know how important exit strategies are to our ultimate success. Position management skills must be activated when share price rises or falls dramatically and when dividends become an issue or when a strike is in-the-money as expiration of the contract nears. Using our 20%/10% guidelines assist us in defining when to close [...]

13 Comments Continue Reading →

Exchange-Traded Funds: Funding Option-Selling Portfolios With ETFs

For the strategies of covered call writing and selling cash-secured puts, we are selling the right, but not the obligation, to buy or sell 100 shares of the underlying security. That security can be a stock or and exchange-traded fund (ETF). In this article, I will highlight ETFs and demonstrate a few approaches to funding [...]

23 Comments Continue Reading →
Ask Alan

Ask Alan #107 – How To Use The 20%/10% Guidelines

Alan answers a question requested by several new members, who ask: “Can you produce a video explaining the 20%/10% guidelines?” If you want more “Ask Alan” videos, you can view the archive. More Video: For those new to Alan’s system of Covered Call Writing, be sure to take the Free Beginners Corner Series Free Training [...]

5 Comments Continue Reading →
covered call writing and puit-selling in bear markets

Generating Profit When Share Price Declines 10% In Two Months

Can we use covered call writing and selling cash-secured puts to generate profits when share price declines by 10% in two months in a bear or volatile market environment? I am writing this article on January 5th, 2015, the worst day the market has experienced in  over three months. This hypothetical trade represents an unscientific [...]

23 Comments Continue Reading →

Alan’s 2015 New Year’s Greeting & Resolutions

Join me as I take a quick look back at 2013 & 2014, review my expectations for BCI in 2015. As with 2014, this year’s resolution is for you. I realize that I’m just a man with an idea and a dream, but because of you that dream has been realized to an extent I [...]

Leave a comment Continue Reading →
Covered call writing option basics

Option Prices: The Role Of Interest Rates And Dividends

Mastering options trading basics includes understanding the factors that impact our option premiums. The original Black Scholes pricing model was designed to evaluate European Style options which can only be exercised on expiration Friday, not earlier. Here is a brief summary of the factors considered in these original pricing models:   These four main factors [...]

12 Comments Continue Reading →
market volatility and option-selling decisions

Covered Combinations: Merging Covered Call Writing and Put-Selling into One Strategy

A Covered combination (“combo trade”) trade is the simultaneous sale of an out-of-the-money (OTM) call and an out-of-the-money  put with the same expiration date on 100 shares of a stock or ETF (exchange-traded fund). It consists of a combination of a covered call and a short put position on a share-for-share basis. The investor generates two premiums from the [...]

14 Comments Continue Reading →
covered call writing calculations

Using Put-Selling To Enter A Covered Call Trade At A Discount

Combining covered call writing and selling cash-secured puts into a multi-tiered option strategy is one way to hedge against bear and volatile market environments. In my book, Selling Cash-Secured Puts, I refer to this as the PCP or put-call-put-strategy. First I will give a general overview of the strategy and then an example using specific [...]

25 Comments Continue Reading →
Ask Alan

Ask Alan #106 – Using Put Options To Buy Stocks At A “Discount”

Alan answers a question shared by Richard, who asks: “In your recent seminar in Philadelphia you briefly mentioned that you could buy a stock at a discounted price using puts. Can you give an example how to do this with one of the stocks on your premium stock list? Thanks very much.” If you want [...]

11 Comments Continue Reading →