beginners corner

Ask Alan #153 | Using Options to Mitigate Stock Price Losses

Alan answers a question posed by David, who asks:

I’ve been reading about stock repair strategies involving options. Can you explain how this works and the pros and cons?
Thanks,
David

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It’s the 2nd Wednesday of the month. Time for another original episode of Ask Alan. AA#153, “Using Options to Mitigate Stock Price Losses”

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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.

3 Responses to “Ask Alan #153 | Using Options to Mitigate Stock Price Losses”

  1. Alan Ellman December 12, 2018 5:05 pm #

    Premium members:

    This week’s 8-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site. The report also lists Top-performing ETFs with Weekly options as well as the implied volatility of all eligible candidates.

    New members check out the video user guide located above the recent reports.

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

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

    NOT A PREMIUM MEMBER? Check out this link:

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

    Alan and the BCI team

  2. Patrick December 14, 2018 4:09 am #

    Hello Alan

    I have reviewed the 8 videos below and a lot of info on your website. For someone looking to generate a consistent monthly cash flow with cover calls – what do you recommend would be the best product to sign up for on your website?

    Also a quick question. i wrote a covered call and strike price was reached and stock maintained above the strike price for a 2 days. Why wasn’t i called out? Are you only called out the expiration day – or can your stock be called away at any time? Thanks

    I appreciate your content and it has helped me a lot. Thank you

    Patrick

    • Alan Ellman December 14, 2018 6:59 am #

      Patrick,

      The best product, after reviewing the Beginners Corner” is “The Complete Encyclopedia for Covered Call Writing- classic edition” Here is a link to more information:

      https://www.thebluecollarinvestor.com/alan-ellmans-complete-encyclopedia-for-covered-call-writing-scover/

      Since we are dealing with “American Style Options”, our contracts can theoretically be exercised at any time through expiration. However, from a practical perspective, early exercise is extremely rare for in-the-money strikes for several reasons including that the option holder will make more money by selling the option as opposed to exercising it. A rare exception may be when the option contract expires after an ex-dividend date. All this information is detailed in the recommended book.

      Alan

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