Comments on: Investor Psychology and the Need for Structured Plans https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/ Learn how to invest by selling stock options. Thu, 05 Jan 2012 19:49:24 +0000 hourly 1 By: admin https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/#comment-3708 Fri, 04 Nov 2011 10:27:37 +0000 /blog/?p=4081#comment-3708 Barbara,

I absolutely love when I implement this strategy. It really can be employed at any time during the contract cycle as long as the cash generated from your new position is greater than the time value of the closed short option position. For example, if the time value of the original short option is $0.20, you would want to generate a greater time value with the new position. Practically though, it would be difficult to generate a great time value the last week of the contract as erosion of time value declines precipitously the last 2 weeks of the cycle as shown in the graphic below.

Alan

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By: Barbara https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/#comment-3707 Fri, 04 Nov 2011 06:49:13 +0000 /blog/?p=4081#comment-3707 Alan,

On page 264 of your newest book you discuss the mid contract unwind exit strategy. How late into the contract can this strategy be used?

Thanks for all your help.

Barbara

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By: admin https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/#comment-3706 Thu, 03 Nov 2011 23:08:32 +0000 /blog/?p=4081#comment-3706 Fran (#21),

Generally I consider rolling strategies as close to expiration Friday as possible. The main reason relates to the risk involved in owning the underlying stock. Why not keep it to just 1 month? If the strike is in-the-money we have protection of our initial option premium so why not ride it to expiration Friday and then evaluate whether you want that equity in next month’s portfolio? An exception to this is when the strike is so far in-the-money that the time value approaches zero. In that case you may want to close your entire position and use the cash to execute a different cc position and set up a second income stream in the same month with the same cash.

Alan

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By: admin https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/#comment-3705 Thu, 03 Nov 2011 21:37:08 +0000 /blog/?p=4081#comment-3705 Premium members:

This week’s 6-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site.

For your convenience, here is the link to login to the premium site:

http://www.thebluecollarinvestor.com/member/login.php

Not a premium member? Check out this link:

http://www.thebluecollarinvestor.com/membership.shtml

Alan and the BCI team

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By: Fran https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/#comment-3704 Thu, 03 Nov 2011 19:51:43 +0000 /blog/?p=4081#comment-3704 Alan,

How close to expiration friday do you consider rolling your options? Tomorrow too early? Thanks a lot.

Fran

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By: admin https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/#comment-3703 Thu, 03 Nov 2011 17:03:25 +0000 /blog/?p=4081#comment-3703 Jeff,

If you are a premium member, the Elite version of the Ellman Calculator is found in the “resources/downloads” section of the premium site. There is also a user guide in that same area. If you are a general member, send me an email (alan@thebluecollarinvestor.com) and I’ll send you a copy of the Basic Ellman Calculator along with its associated user guide.

Alan

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By: Jeff https://www.thebluecollarinvestor.com/investor-psychology-and-the-need-for-structured-plans/#comment-3702 Thu, 03 Nov 2011 12:13:27 +0000 /blog/?p=4081#comment-3702 Alan,

How can I get a copy of the calculator you mentioned in comment 16?

Thank you.

Jeff

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