beginners corner

Blog

using beta when selling cash-secured puts and covered call writing

Using Beta To Capture Higher Premium Returns

When using covered call writing and put-selling strategies it is important to set goals for initial returns in order to select the most appropriate underlying security and option. My goal for initial returns is 2% – 4% per month and a bit higher in a bull market environment. Recently, several of our members have contacted [...]

28 Comments Continue Reading →
covered call writing and put selling decisions using economic reports

Economic Reports And Our Covered Call Writing Decisions

Covered call writing and put-selling results are enhanced by selecting the best underlying securities and most appropriate options. Stock selection involves screening via fundamental and technical analysis as well as common sense screens (like avoiding earnings reports). Option selection is based on several factors including chart analysis, overall market assessment and personal risk tolerance. In [...]

33 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 [...]

4 Comments Continue Reading →
covered call writing seminar

How Much Did That Stock Cost Us?/ How Much Did We Receive When We Sold It?/When Options Are Exercised

Covered call writing and put-selling generates monthly cash flow because we are selling option contracts and getting paid for undertaking the contract obligations. When a contract is exercised, we then enter another phase where we either buy or sell shares. The purpose of this article is to review and (hopefully) simplify the mathematics of exercise [...]

20 Comments Continue Reading →
implied volatility and option selling

Implied Volatility: More Important Than Historical Violatility To Covered Call Writers And Put-Sellers

Understanding the concept of implied volatility is essential for successful covered call writing and selling puts. First, implied volatility gives us a window into the “market’s” perception of future price movement. It will also allow us to calculate probability of a stock price reaching a certain level. Like all other parameters, implied volatility, although quite [...]

16 Comments Continue Reading →
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 [...]

18 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 [...]

28 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 [...]

7 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 →