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Ask Alan #145 – Evaluating a Losing Covered Call Trade

Alan answers a question posed by Kevin, who asks:

Most of my trades have been winning ones but I had one go south. I would like to learn from this trade so I’m hoping you can help me learn how to handle it tactically and emotionally. Here it is:
12/20/17: Buy 200 x GRUB at $73.00
12/20/17: Sold 1x ITM $72.50 call at $2.90
12/20/17: Sold 1x ITM $70.00 call at $4.25
Stock hovers between $71.00 – $74.00 for the first 3 weeks of the contract
1/8/18: Starts 3 days of 3 – 4% price declines with no apparent negative news
1/10/18: 10% guideline is reached and shares were sold at $67.70

My questions:
Did I select the wrong stock to begin with?
Did I misinterpret the technical signals?
Should I have rolled down instead of selling the stock?
How would you have approached this situation?
Many thanks,


It’s the 2nd Wednesday of the month. Time for another original episode of Ask Alan. AA#145, “Evaluating a Losing Covered Call Trade ”

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

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3 Responses to “Ask Alan #145 – Evaluating a Losing Covered Call Trade”

  1. Alan Ellman April 11, 2018 5:06 pm #

    Premium members:

    Latest ETF Report now available: Unusual Report this week:

    This week’s report shows only 8 eligible ETFs. This is a result of the recent market volatility and decline related to a potential tariff war with China, an inevitable military engagement in Syria and uncomfortable political events in the US. The good news is the upcoming earnings season which will focus investors in a different direction.

    All 10 Select Sector SPDRs were in negative territory but we charted the best-performers that out-performed the overall market.

    As the market calms, there will be an increase in the number of eligible securities, a trend that we have experienced many times over the past 10 years of producing our Premium member reports.

    Alan and the BCI team

  2. Ponnavolu April 12, 2018 1:08 am #

    Hi Alan and Barry,

    In the ETF report I note the best PAST performers. It does not mean they will perform well in the next month or two or three. Could you please guide me how to use your ETF letter so I can make a decision to invest in those ETF or not.

    much obliged
    Thank you


    • Alan Ellman April 12, 2018 6:22 am #


      Our ETF Reports provide lists of the best-performing ETFs over the past 3 months that meet other system requirements like minimum trading volume and adequate option liquidity (open interest for near-the-money strikes). Performance over the last 3 months does not guarantee that these securities will continue to out-perform but it does throw the odds in our favor. Simply stated, it is better to use out-performers rather than under-performers when entering new positions and this is the reason that these lists are updated on a weekly basis so our members can select from the most recent information available.


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