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covered call writing exit strategies and contract adjustments

Rolling Down And Stock Splits: A Real Life Example

Covered call writing positions can be altered by exit strategies or contract adjustments. Contract adjustments are alterations that are typically made to option contracts when the underlying stock undergoes a stock split, pays a special cash and/or stock dividend or distribution, or is involved in a merger, acquisition or corporate reorganization. Sometimes they are impacted by [...]

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Ask Alan

Ask Alan #102 – Should We Fear an Uptrending Market?

Alan answers a question shared by Tom, who asks: “With this unceasing bull market, almost everything on our premium Stock List is at a top. It seems to me that one of our choices should be stand by until things pull back a bit. Your thoughts are appreciated.” If you want more “Ask Alan” videos, [...]

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Covered call writing calculations

Calculating Future Returns Using Delta

Understanding option calculations is an integral part of the BCI methodology. Using the Ellman Calculators (Basic and Elite versions) will facilitate the process but knowing the “how” and “why” of these numbers will make us all better investors. This article was inspired by Peter, one of our members. He was concerned about the potential drop [...]

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covered calls versus covered puts

Covered Puts Versus Covered Calls

Covered call writing is the main focus of this site and the BCI methodology. Based on member demand and similarity of strategies we have been adding information on selling cash-secured puts, the topic of my upcoming 5th book. Recently I have received inquiries on related strategies that have led to some confusion specifically about covered [...]

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Ask Alan

Ask Alan #101 – Managing a Risky Trade

Alan answers a question shared by Ty, who asks: “I flat out gamble on one trade in my portfolio, and this is my gamble stock: (1) On 6/30/14 I bought GWPH at $103.90 and sold the 8/16 $105 call @ $9.00. (2) The earnings report (ER) is 8/6/14. (3) As of 7/1/14 GWPH ran up [...]

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Blue Collar Investor ETF Report

ETF Option Trading vs. Index Option Trading

Most options traders including covered call writers are familiar with exchange-traded funds (ETFs) and many trade options on these securities. Many have also heard of, but are not as familiar with, index options. The purpose of this article is to detail the differences between ETF option trading and index option trading. Definitions  Exchange-traded fund (ETF): [...]

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Ask Alan

Ask Alan #100 – Can We Day Trade Covered Call Options?

Alan answers a question shared by Marcus, who asks: “I love your tutorials on covered call writing. I’m a novice in the trading world and am very excited to try options trading. I just have a question that I hope you can answer or point to one of your videos that may contain the answer. [...]

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covered call writing and the Ellman Calculator

Writing Covered Calls On Broad Market Exchange-Traded Funds

The initial main step for covered call writers is to select the best underlying security. This choice will vary from investor to investor based on goals and risk tolerance. Some of our members prefer exchange-traded funds (ETFs), a strategy I use in my mother’s portfolio. ETFs offer the advantages of instant diversification, less volatility (in [...]

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Ask Alan

Ask Alan – Will The Ex-Dividend Date Cause Early Exercise?

Alan answers a question shared by Ben, who asks: “Thanks for TRN. I’ve been doing great with this stock since it was published in your stock reports. I recently sold the (July) $40 call option and noticed on the premium report that the ex-dividend date is July 11th and I’m worried that it may be [...]

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calculating covered call writing returns using the Ellman Calculator

Calculating 2-Month Returns When Rolling Out And Up

Options calculations will give us an accurate assessment of our covered call writing profits. It’s more meaningful to use percentages rather than dollar amounts when executing these calculations. For example, a $1000.00 profit on a $10,000 investment (10%) is much more significant than a $1000 return on a $100,000 investment (1%). That’s why percentages forms [...]

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