Comments on: Covered Call Writing: The Case For 1-Month Options https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/ Learn how to invest by selling stock options. Wed, 20 Apr 2022 11:29:04 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/#comment-551631 Wed, 20 Apr 2022 11:29:04 +0000 http://www.thebluecollarinvestor.com/?p=7708#comment-551631 In reply to Petkus.

Petkus,

You are 100% correct that we must avoid using stocks when earnings are about to be reported. However, there are always solutions to challenging scenarios.

My portfolios turn over 20% to 80% due to earnings and screening results. We have no loyalty to stocks or ETFs if they no longer serve our best interests.

In the case where we are using low cost-basis, dividend-bearing stocks in non-sheltered accounts and we want to retain these securities for the long-term, there is usually a solution here, as well.

Most of these stocks have weekly options associated with them. If an earnings report is due in the 3rd week of a 4-week contract, we write weekly in weeks 1 and 2, skip week 3 and write another weekly in week 4. Then we return to monthlys for the next contract cycle.

Investing is not a perfect world but there are always best solutions.

Alan

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By: Petkus https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/#comment-551431 Tue, 19 Apr 2022 22:02:57 +0000 http://www.thebluecollarinvestor.com/?p=7708#comment-551431 Hi Allan,

Would it be more realistic to calculate % return based on 8 months rather than 12 months since we skip trading options for a stock 4 times per year when earnings are announced? So instead of March 37.2%, April 28.8%, July 21.1% it would be March 24.8%, April 19.2%, July 14.1%? Or you do sell shares of the traded company utilizing cash on another company (opportunity) that does not have earnings that month? I assume most call writers would be holding companies long-term collecting dividends and share price annual rise…?

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By: Alan Ellman https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/#comment-10828 Mon, 01 Apr 2013 21:31:33 +0000 http://www.thebluecollarinvestor.com/?p=7708#comment-10828 Running list stocks in the news: EVR:

Evercore Partners, a boutique investment banking firm was founded by Roger Altman, a former US Deputy Treasury Secertary in the Clinton administration. From 2007-2009 EVR posted losses but turned that around with profits of $0.95, $1.48 and $1.78 per share in the next 3 years. Revenues increased by 11%, 45% and 21% in the past 3 years. Analysts are expecting EPS growth of 28% and sales growth of 14% in 2013. Pretax margin (18.8%) and ROE (18.7%) both reached 6-year highs last year. Our premium running list shows an industry rank of “A”, a beta of 1.37 and a % dividend yield of 2.10%.

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/#comment-10820 Mon, 01 Apr 2013 13:52:07 +0000 http://www.thebluecollarinvestor.com/?p=7708#comment-10820 In reply to Linda.

Linda,

The “single” tab is best suited when evaluating the various strike prices for a single security. The “multiple” tab is used for evaluating dozens of stocks and multiple strike prices.

Alan

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By: Barry B https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/#comment-10787 Sun, 31 Mar 2013 19:49:37 +0000 http://www.thebluecollarinvestor.com/?p=7708#comment-10787 In reply to Steve Z.

Hello Steve,

Good to hear from you again…

Your first question:
We have had a large number of requests to add this capability as another tool to help in stock selection.

For the typical case (if there is ever a typical case), as you noted, passing the screen is usually enough. This was and is still a key component of Alan’s system. However, some traders, based on their risk profile, feel more comfortable with an additional metric to help them choose from among stocks in the same category, i.e. “Passed All Screens” or “Mixed Technicals”. Hence we added the ability to have the screen provide “finer” results.

This does not imply that the system is modifying the methodology. It is only providing another level of tuning the system to the subscribers level of risk. I personally review at the chart as the “tie breaker”.

Your second question:
MSN uses a proprietary methodology they license from another source. It does not publish the details of how it uses a combination of fundamental and technical factors to determine its’ ratings.

Alan began using StockScouter early on in his development of the methodology to provide an additional, unbiased view of the specific stock and then use the confluence of sources (IBD, StockScouter, the chart, etc.) to accept or reject the stock. This way, multiple independent sources need to “agree” on the quality of a specific stock.

His system was based on using as many free services as possible to keep the traders cost low, MSN StockScouter had and continues to have a very large number of followers…and remains free.

Best,

Barry

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By: Alan Ellman https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/#comment-10782 Sun, 31 Mar 2013 15:52:49 +0000 http://www.thebluecollarinvestor.com/?p=7708#comment-10782 In reply to Steve Z.

Steve,

I firmly believe that weeklys WILL have a place in our BCI methodology. The screening process will be precisely the same so as a result we have been monitoring our watch list over the past several months to get an idea as to how many securities pass our screens and have weeklys. Thus far that number is NOT sufficient to populate an adequately sized watch list. As you know, weekly products are being added by the exchanges every week due to consumer demand. In the near future, we plan to add another product for our premium members with a list of securities eligible for cc writing with weeklys.

That being said, I still like monthlys the best because it requires less monitoring that weeklys and allows appropriate time for exit strategies, a pillar of the BCI methodology. However, for those members willing to invest additional time for the potential of slightly higher returns weeklys may be a useful choice.

BTW: We currently list weekly choices in our ETF Reports, usually 4-5 each week.

More to come….

Alan

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By: Linda https://www.thebluecollarinvestor.com/the-case-for-1-month-options-3/#comment-10780 Sun, 31 Mar 2013 15:12:18 +0000 http://www.thebluecollarinvestor.com/?p=7708#comment-10780 Alan,

Thanks for the calculator. It looks like a great tool for covered call writing. My question is when you use the multiple tab versus the single tab. Thanks for your assistance.

Linda

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