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Option selling/ open interest and Volume

Option Liquidity: When Is Vol(ume) Greater Than Open Interest?

Check the options chain before selling a covered call or cash-secured put. In addition to determining the premiums and returns we will generate we also need to make sure the interest or liquidity in these options will be adequate enough for favorable trade executions. Below is a typical options chain showing both Vol(ume) and open interest (OI): [...]

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Why do Call Buyers Exercise Early Prior to the Ex-Dividend Date?

Covered call writers know that early exercise is extremely rare. Call buyers are generally better off selling the option rather than exercising early. In this article we will evaluate why a call buyer may choose to exercise an in-the-money call option prior to expiration by evaluating the choices available to these option holders.   Value of [...]

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covered call writing and dividend capture

Covered Call Writing And Dividend Capture: Evaluating A Proposed Strategy

Capturing dividends using covered call writing has been a topic on great interest lately. I recently wrote an extensive white paper on this topic located in the “resources/downloads” section of your premium site. In this article I will evaluate an interesting approach to a strategy recently sent to me by one of our members who [...]

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Delta rises as strikes go deeper in-the-money

Delta And The Moneyness of Options

Understanding and mastering the Greeks are key factors in becoming an elite covered call writer and put-seller. In this article, I will focus on delta, one of the important Greeks, as it relates to the moneyness of options (in-the-money, at-the-money or out-of-the-money). Let’s start with a review of a few definitions: Definitions Greeks: They are numbers [...]

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What Are Wash Sales And Wash Trading? Are They The Same?

Covered call writing and put-selling involve the buying and selling of stocks and options. When executed in non-sheltered accounts, taxable events are created. Since the BCI community is populated with savvy investors, the topic of wash sales has come up frequently and some have used the term wash trading interchangeably with wash sales. This article will discuss [...]

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fundamental screens for covered call writing and put-selling

Using Fundamental Analysis To Screen For Option-Selling Stocks

Fundamental analysis, technical analysis and common sense principles make up the 3-pronged screening system used in the BCI methodology for locating option selling stocks. We start with the IBD 50 and move to the other screens from there but I always encourage the use of additionalther resources to locate elite candidates to serve as the [...]

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put-selling calculations

Selling Cash-Secured Puts Instead Of Placing Limit Orders

Selling cash-secured puts is a strategy with goals of creating monthly cash flow while retaining capital preservation as a priority. However, many of our astute members are also using this strategy to purchase a stock “at a discount” instead of setting up limit order instructions to the broker. Before highlighting the strategy, let’s review the [...]

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Alan Ellman/covered call writing seminar

Capital Gains (Losses) For Selling Cash-Secured Puts In Non-Sheltered Accounts

In a recent article, tax implications for covered call writing was discussed. In this publication I will highlight the tax ramifications as they apply to selling put options. What is a Capital Gain?  A capital gain is an increase in the value of as capital asset, such as a stock or an option that gives [...]

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covered call writing and capital gains

Capital Gains (Losses) For Covered Call Writing In Non-Sheltered Accounts

Whether we sell covered calls or cash-secured puts strong consideration should be given to trading in sheltered accounts whenever possible. Most, if not all, of our trades will be short-term in nature (less than one year) and therefore will be taxed at the ordinary income tax rate (up to 35%) which is much higher than [...]

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stocks with monthly reports making them too risky for covered call writing and put-selling

Airline Stocks Now “Banned” From Covered Call Writing And Put-Selling Strategies

Stocks eligible for our covered call writing and put-selling portfolios are screened in a 3-pronged approach: fundamental analysis, technical analysis and “common sense principles” like avoiding earnings reports. One of the categories under the common sense umbrella is “banned stocks” due to monthly same store retail sales. This list, once 80-long, is now down to [...]

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