Educated covered call writers know that it is critical to sell our options early in the 1-month cycle. I always try to sell my options in the first week of a 4-week expiration cycle and no later than the beginning of the second week of a 5-week cycle. The reason has to do with the [...]
Entries Tagged as 'time value'
Theta-Time Decay of our Option Premiums
June 6th, 2010 · 25 Comments
Tags: Market Tone · S&P 500 · theta · time value
Implied Volatility and our Option Premiums
November 29th, 2009 · 42 Comments
What makes some options premiums worth so much more than others? Let’s say we have two stocks, A and B. Both are trading @ $25/share. We look to sell the same month A-T-M $25 strike and one (stock A) returns 2% and the other (stock B) 4%. WHY? The answer lies predominently in the mysterious world of implied [...]
Tags: Cashing in on Covered Calls · S&P 500 · VIX · economic news · historical volatility · implied volatility · intrinsic value · standard deviation · time value
Selling the In-The -Money Strike- A New Way of Thinking
March 8th, 2009 · 19 Comments
A few weeks ago I wrote an article entitled, Selecting the Best Strike Price. Since then I have received several emails asking for more information as to why I sell I-T-M strikes and the rationale behind my thoughts. I fully understand your concern about this issue since historically Out-Of-The-Money strikes have been the most popular.
Before [...]
Tags: Alan Ellman · Cashing in on Covered Calls · Economy · S&P 500 · The Blue Collar Investor · VIX · economic news · intrinsic value · strike price · time value
