Exit strategy execution is a critical skill every covered call writer should master. In addition to managing positions where share price has decreased there are also situations where we can benefit when price has dramatically accelerated. Let’s look at a trade recently executed by one of our Premium Members: Our member generated a nice 1-month [...]
Ask Alan – How to Compute Final Covered Call Returns-Part 1
Alan answers a question posed collective my many of the BCI member family, who ask about calculating final returns after the trade has been completed. This is part 1 of a 3 part series. If you want more “Ask Alan” videos, you can view the archive. More Video: For those new to Alan’s system of [...]
Binary Options Are The Latest Rage, But Barely Like Traditional Options by Guest Author Tom Cleveland
Over the past few years, the popularity of traditional options has grown exponentially, as investors have been more willing to experiment with a broader set of investment genres. The market has responded to this more expansive behavior by creating a myriad of new products such as “weeklys” and “minis”, topics Alan has addressed on this [...]
Ask Alan – Who actually buys my option?
Alan answers a question by Shamin from Belgium. who asks: “If I sell a covered call and the stock price goes down, and then I decide to buy a call… — do they cancel each other out? (or) — can the person who bought my option originally still ask for my shares?” If you want [...]
Using LEAPS Covered Calls to Increase Dividend Yield
Innovative covered call writers can develop ideas of implementing a strategy in unconventional ways. For example, we can invest in a money market or CD and perhaps not even beat the inflation rate with those dividends. We can buy a quality bond and wait six months to receive our first (ho-hum) return. Covered call writers can [...]
Ask Alan – Evaluating a Covered Call Trade
Alan answers a question by William of Manteca, CA. who asks: “With these Details in mind… * RAX was trading at $59 * $50 call option was selling at $5.70. * Initial return for selling $55 in-the-money call option was 3.1%. – $1.70 of time value – $4 in-the-money ($4 of intrinsic value) … how [...]
LEAPS And Covered Call Writing
Covered call writing entails buying a stock and then selling an option. But what if I buy a call option instead of the stock and then sell a call option on that option? I’ll be spending less money than the outright purchase of the equity and still generate cash from the sale of the call [...]
Ask Alan – Is It Too Expensive To Buy Back The Options When The Stock Price Increases?
Alan answers a question posed by Al from Melbourne, Florida. who asks: “One of my first option choices was to sell 5 positions on HTZ with a strike price of $20. When I opened the position, HTZ was trading at $21.06 per share, and I received the premium of $1.40 per share when I sold [...]
Covered Call Writing In India
I recently learned that covered call writing comes in all shapes and sizes. Although we are honored to have a significant number of international members, most trade US stocks on US exchanges with the rules we are familiar with. But what if the rules were different? Let’s look at baseball for a minute. What if [...]
Ask Alan – Trading in Bear Markets
Alan answers a question posed by Kevin of Charlotte, NC. who asks: “I think you do a great job and provide a great service to many who would otherwise be ignored by the Wall Street elite. My question revolves around bearish markets and retracements. You have advocated selling in-the-money calls where essentially you’re only picking [...]
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Should I Roll My Option When The Stock Price Is DEEP In-The-Money?
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Ask Alan – How to Compute Final Covered Call Returns-Part 1
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Binary Options Are The Latest Rage, But Barely Like Traditional Options by Guest Author Tom Cleveland
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Ask Alan – Who actually buys my option?
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Using LEAPS Covered Calls to Increase Dividend Yield
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Alan Ellman Premium members: Just added to your premium site:
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Malcolm Alan, In your calculations you ignore the origi
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Come See Me at the Money Show in Vegas, May 2013
