Comments on: Tax Treatment of Covered Call Writing in Non-Sheltered Accounts https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/ Learn how to invest by selling stock options. Thu, 05 Jan 2012 20:39:36 +0000 hourly 1 By: financialreporting » Blog Archive » Why go naked when you can go covered? https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/#comment-363 Wed, 23 Dec 2009 18:43:14 +0000 /blog/?p=821#comment-363 […] (IRA) or non-sheltered account. For non-sheltered accounts, Allan Ellman discusses tactics in his Blue Collar Investors blog but for those CPA-minded individuals who want to hear it directly from the horse’s […]

]]>
By: admin https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/#comment-362 Fri, 27 Mar 2009 15:04:45 +0000 /blog/?p=821#comment-362 Excellent article about President Obama’s communication challenge:

http://www.bookofjoe.com/2009/03/daddy-tell-me-what-exactly-is-a-derivative.html

Alan

]]>
By: admin https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/#comment-361 Fri, 27 Mar 2009 14:00:49 +0000 /blog/?p=821#comment-361 From time to time we will hear a financial term that we are not familiar with. One of the weeknesses of stations like CNBC is that they speak to seasoned investors who live the Wall Street life. Too often, these terms are not defined or explained.

A free website that that will define most of these terms in an easy to understand manner is Investor Words:

http://www.investorwords.com/

You may want to bookmark this site and have easy and quick access to financial terms. Whenever I find a site, particularly a free one, that can facilitate our investment strategies, I will publish it on these comments links of my most recent article.

Alan

]]>
By: admin https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/#comment-360 Thu, 26 Mar 2009 10:19:36 +0000 /blog/?p=821#comment-360 With the market’s recent turnaround, it’s been easier to locate stocks with uptrending chart patterns. Prior to that, I found myself settling for consolidating (sideways) patterns and selling I-T-M strikes. With technically sound charts along with positive market tone (we’re not quite there yet), I am more likely to sell O-T-M strikes to get the extra upside appreciation. Here are a few equities with uptrending EMAs:

AAP
BWLD
NFLX
PZZA
STAR
SVR

Having a strong watchllist is the backbone to successful investing and maximizing returns.

Alan

]]>
By: admin https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/#comment-359 Wed, 25 Mar 2009 16:46:55 +0000 /blog/?p=821#comment-359 Don,

Thus far, this investment is making you look like a genius!

I would not buy back the option at this time. You originally sold an O-T-M strike which has only time value. Now, with the price of the stock above the 45 strike, the option premium has both time value and intrinsic value ($2.50 per share). You would be paying more to buy back the option than the original option sale. Since this is not an expiration Friday exit strategy, this is not money well spent.

View this as you made a great 1-month profit on the option sale, perhaps another $50 per contract on the stock appreciation and currently $250 in downside protection. On or near expiration Friday, evaluate for a possible roll out or roll out and up if the share price is still above the strike.

Keep up the good work.

Alan

]]>
By: Don R. https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/#comment-358 Wed, 25 Mar 2009 16:26:32 +0000 /blog/?p=821#comment-358 Alan,

On Monday I bought qsii for $44.50. Then I sold the 45 covered call option. Today the stock is around 47.50. Sould I buy back the option and why?

Thanks for any help you can give.

Don

]]>
By: admin https://www.thebluecollarinvestor.com/tax-treatment-of-covered-call-writing-in-non-sheltered-accounts/#comment-357 Tue, 24 Mar 2009 19:01:55 +0000 /blog/?p=821#comment-357 Following up on yesterday’s hypothetical with DLTR:

It is 1-hour before trading stops on Tuesday. DLTR is trading @ $40.76. Here’s how the trade would play out:

Buy 100 x DLTR @ $40.76

Sell 1 x April $40 call @ $2.10

ROO = 210 – 76/4000 = 3.4% 1-month return

Downside protection = 76/4076 = 2%

We are guaranteed a 3.4% 1-month return as long as our shares do not depreciate in value by more than 2% by April 17th.

Alan

]]>