Every so often we will see a company declare a “special dividend” which is separate from the typical recurring dividend cycle, if there is one. It is frequently a reflection of exceptionally strong earnings and/or a company with a large cash balance. It is a positive sign regarding the financial health of this corporation. Some [...]
Examining A Covered Call Trade
Mastering covered call writing requires us to learn from our mistakes and not repeating them. We can then utilize a series of guidelines and rules that will guide us to the highest possible returns with the least amount of risk. Maximizing profits with capital preservation in mind is what the BCI methodology is all about. [...]
Stock Option Expiration Cycles: Beware Of Expiration Dates
In the BCI methodology for covered call writing we use predominantly 1-month options. The reasons are as follows: Generate the highest annualized returns Allows us to avoid earnings reports, a key rule in the BCI methodology Keep our obligation to a short-term time frame allowing us to keep only the best current performers in our [...]
Covered Call Writing: The Case For 1-Month Options
I sell predominantly 1-month options when selling covered calls. This decision was NOT based on anything I read or was told, but rather on experience and common sense. Most stocks with options have at least four expiration cycles affiliated with them at any point in time…the current month, the next month and two more months further [...]
Covered Call Writing – Fundamental and Technical Analysis: Earnings and Price Strength Analysis
Successful covered call writing requires discipline and appropriate analysis specific for this great strategy. In the Blue Collar Investor (BCI) methodology we incorporate three major screening components before we even look at options chains: Fundamental analysis Technical analysis Common sense principles The details of the entire screening process are discussed in my books and DVDs and in [...]
The 10 Most Common Mistakes Made By Covered Call Writers And How To Avoid Them
Your neighbor bursts into your house and exclaims “I just read this article…You buy a stock and sell an option and cash flows into your account instantly. It’s a miracle! I’m getting started tomorrow” If you are a good neighbor and knowledgeable about covered call writing you will immediately tie him to a chair, put tape over [...]
Margin Accounts and Covered Call Writing
Can covered call writing profits be leveraged to even higher levels using margin accounts? In real estate investing, the concept of leveraged investing is well known and documented in such best-sellers as Robert G. Allen’s Nothing Down for the 2000s and Michael A. Lechter’s OPM (Other People’s Money). The idea of generating profit while using [...]
What Is Slippage And How Does It Impact Our Trading Success?
When studying investment basics, the term slippage has two applications. In general, it means having a trade executed at a price less favorable to the trader. Let’s look at the two areas where we may see this term used: An order is executed at a worse-than-expected price Stock and options Slippage occurs when there is [...]
Covered Call Writing and Exchange-Traded Funds
A critical requirement of my covered call writing system is to be properly diversified by stock, industry and cash allocation. No one stock or industry should represent more than 20% of your portfolio holdings. Owning five different stocks in five different industries would require you to own at least 500 shares since each options contract [...]
S&P Futures and Fair Value.
Many covered call writers start their day by tuning in to CNBC. They look to the lower right side of the TV screen and see: The S&P Futures are UP 5 points…..GREAT!!!!!!!!!! Fair Value is + 10…….what’s that mean? The market is expected to open DOWN…….ughhhh……why? To understand how this works, we need to first [...]
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Alan Ellman Premium members: This week's 6-page report
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Alan B Message: Ron says: I bought the stock at ninety
