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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 [...]

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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 [...]

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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 [...]

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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 [...]

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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 [...]

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Covered call writing option basics

Option Prices: The Role Of Interest Rates And Dividends

Mastering options trading basics includes understanding the factors that impact our option premiums. The original Black Scholes pricing model was designed to evaluate European Style options which can only be exercised on expiration Friday, not earlier. Here is a brief summary of the factors considered in these original pricing models:   These four main factors [...]

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market volatility and option-selling decisions

Covered Combinations: Merging Covered Call Writing and Put-Selling into One Strategy

A Covered combination (“combo trade”) trade is the simultaneous sale of an out-of-the-money (OTM) call and an out-of-the-money  put with the same expiration date on 100 shares of a stock or ETF (exchange-traded fund). It consists of a combination of a covered call and a short put position on a share-for-share basis. The investor generates two premiums from the [...]

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covered call writing calculations

Using Put-Selling To Enter A Covered Call Trade At A Discount

Combining covered call writing and selling cash-secured puts into a multi-tiered option strategy is one way to hedge against bear and volatile market environments. In my book, Selling Cash-Secured Puts, I refer to this as the PCP or put-call-put-strategy. First I will give a general overview of the strategy and then an example using specific [...]

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Ask Alan

Ask Alan #106 – Using Put Options To Buy Stocks At A “Discount”

Alan answers a question shared by Richard, who asks: “In your recent seminar in Philadelphia you briefly mentioned that you could buy a stock at a discounted price using puts. Can you give an example how to do this with one of the stocks on your premium stock list? Thanks very much.” If you want [...]

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