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Beware of High Premium Returns

Covered call writers and put-sellers must set goals regarding targeted premium returns before entering trades. These objectives are based on personal risk tolerance, market assessment and chart technicals. One of the most flagrant mistakes made by option sellers is to make trade decisions based on the highest premium returns. Covered call writing and put-selling are […]

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covered call writing calculations

When Strikes Move Deep In-The-Money: A Real-Life Trade

Covered call writing exit strategies include scenarios when share price moves up or down. Our main enemy is share depreciation where we need to mitigate losses but we must also have the ability to enhance returns when share price rises under certain specific conditions. This article will evaluate a trade sent to us by Mario […]

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covered call writing and technical analysis

Setting Up a Covered Call Trade by First Selling an Out-Of-The-Money Put

A covered call trade can be initiated by first purchasing the underlying stock or exchange-traded fund (ETF). It can also be launched by first selling an out-of-the-money (OTM) cash-secured put and allowing exercise if the put strike is in-the-money (ITM) at expiration. This article will highlight a real life trade with LogMein, Inc (LOGM) which began by selling […]

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timing of option-selling trades

What is the Best Time to Execute Our Trades?

Covered call writing and selling cash-secured puts involve buying and selling stocks and options. We work meticulously to do everything possible to throw the odds in our favor to result in successful trades. Achieving the highest level of returns in a low risk manner is one of our mission statements. I have frequently highlighted the three required […]

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Over-Trading Our Option Positions: Good for Brokers, Not Good For Us

Exit strategies for covered call writing are essential for achieving the highest levels of success. In the BCI methodology, we have a series of guidelines that assist us in determining which position management techniques should be instituted and when we should consider them. Not taking appropriate action when responses to changes in our stock and option positions […]

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Rolling Out-and-Up After Understanding the Math

Elite covered call writers understand the importance of position management in maximizing returns. As a result, I receive a significant number of inquiries regarding exit strategy execution. This article will highlight one such question I received from John which has two components to it. The main item relates to rolling-out-and-up, a frequently-used exit strategy in […]

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covered cakll writing with the Dow 30 stocks

Using Multiple Premium Reports to Fund our Covered Call Writing and Put-Selling Portfolios

Stock and ETF (exchange-traded fund) selection is one of the three required skills needed to achieve the highest level of success when selling options. Covered call writers and put-sellers have varying degrees of personal risk tolerance and trading styles. As a result, over the years and based on member feedback, the BCI team has added […]

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technical analysis for covered call writing

How To Generate Cash With Elite Stocks: Three Perspectives

Whether we are writing covered calls, selling cash-secured puts or simply buying and selling stocks, the first important requirement is to develop or have access to a quality watch list of elite-performing securities. Once we have purchased a stock or exchange-traded fund (ETF), our goal is to make a profit. In this article, three approaches […]

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exercise of options

Will My Broker Automatically Exercise Options That Expire In-The-Money?

We write a covered call or sell a cash-secured put. At expiration, the strike price is in-the-money. For calls that means lower then current market value and for puts it means higher than current market value. To demonstrate the moneyness of these strikes, let’s look at an options chain for Align technology (ALGN), a stock on […]

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Why and When We are NOT Losing Money If We Buy Back an Option for More Money than We Received

Exit strategies for covered call writing and selling cash-secured puts all start with buying back the option. Frequently, the cost to close our short option positions will be less than the premium generated initially from the option sale. This is because of the impact Theta (time value erosion) has on our option premiums. However, students […]

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