In the BCI methodology for covered call writing we use predominantly 1-month options. There are times, however, where we find cash in our accounts (mid-contract) that is inactive. This may be due to closing a position early either because the share price declined significantly or accelerated exponentially. Perhaps Grandma gave you a generous birthday present. [...]
Covered Call Writing and The CBOE’s Volatility Index (VIX)
Stock options strategies, including covered call writing, factor in a multitude of parameters including fundamental and technical analysis as well as many common sense principles. In my books, DVDs and seminars I discuss determining market tone before making any investment decisions. One of the main factors I utilize in this determination is the VIX. The VIX [...]
Covered Call Writing Using The Blue Collar Methodology
Fundamental analysis, technical analysis, common sense principles and calculations are all critical considerations when selling stock options the Blue Collar way. Since this is my first article written on our newly enhanced web site (hope you like it!) I thought it appropriate to use a real-life example to review the basic tenets of our BCI [...]
Covered Call Writing: Factors That Affect The Value Of Our Option Premiums
So you sold an options contract for $380 and generated a 3.5% 1-month return. Did you ever wonder how the market determined the value of that options contract to be $380? The simple equation that most of us know and understand is the following: Option premium = Intrinsic Value + Time Value To review, let [...]
Covered Call Writing: Mid-Contract Unwind Exit Strategy
Mid-Contract Unwind: The major concern for covered call writers is the stock price dropping in value. The option premium collected is money in the bank. Most of our exit strategies are designed to mitigate these losses and turn losses into gains. However, as Blue Collar Investors we should also be prepared to act if the opposite [...]
Covered Call Writing and Holding a Stock Through an Earnings Report
With expiration Friday and earnings season fast approaching our common sense principles (see chapter 8 of my latest book) become even more important. Never sell a covered call option with an upcoming earnings report is a critical BCI rule. But what if you own a stock and love it! Hopefully, your admiration for the stock [...]
Strike Price Selection- A Critical Covered Call Decision
Covered call writing requires a logical sequence of stock and option decisions. Once we have screened our stocks to locate the greatest performing stocks in the greatest performing industries we must make a decision as to which strike price to use. Our choices include: in-the-money at (near)-the-money out-of-the-money Let’s look at the options chain for [...]
The CBOE BuyWrite Index (BXM) vs. The BCI System
In 2002, BXM was developed by the CBOE (Chicago Board Options Exchange) in cooperation with Standard & Poor’s. This is a benchmark index that tracks the performance of a hypothetical covered call strategy on the S&P 500 index. Data on this index can be accessed as far back as 1986. The parameters for this index [...]
Trading Decisions- A Real Life Example
Recently, a BCI member sent me an email describing a series of trades he made with GMCR. After responding to his inquiries I realized that there was a great learning lesson here that could benefit many others as well. With his permission I present the key parts of this email: _______________________________________________________________________________ Hi Alan , I have [...]
LEAPS and Covered Call Writing
Wait a minute! What if I buy a call option instead of the stock and then sell a call option on that option? I’ll be spending less money than outright purchase of the equity and still generate cash from the sale of the call option! This idea has come to many of you and as [...]
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Playing the Bid-Ask Spread When Selling Covered Call Options
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Analyzing a Covered Call Trade by Barry Bergman, Director of Research, The Blue Collar Investor Corp.
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Covered Call Writing Premiums: Intrinsic Value + Time Value
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Entering Our Covered Call Positions Mid-Contract
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Covered Call Writing and the Blue Collar Premium Report
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Covered Call Writing and The CBOE’s Volatility Index (VIX)
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Mid-Contract Unwind Exit Strategy: A Real Life Example
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Covered Call Writing: Stock Options with Additional Expiration Months
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Covered Call Writing and Stock Option Expiration Cycles
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Using Multiple Exit Strategies in the Same Contract Month
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Barry B: Premium Members, The Weekly Report for 05-25-12...
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Adrian: Alan, I first wanted to say that I hope you agreed...
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Alan Ellman: Dan, Glad to assist. The stats above relate to ...
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Dan: Thanks Alan for the prompt answer. However- I\'m n...
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