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Ask Alan – IBD 7% / 8% Rule or BCI 20% / 10% Guideline

Alan answers a question coming from Paul of Jacksonville, FL. Paul writes…
“I began subscribing to the IBD after reading your books and found it helpful. I would like to ask, however, if you follow the IBD’s rule of always selling a stock when it drops 7 to 8%. If the sale of the stock involves selling your short options position this can get pricey, and many times over the past year, it proved better to wait and let the option expire. Your thoughts.”

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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.

6 Responses to “Ask Alan – IBD 7% / 8% Rule or BCI 20% / 10% Guideline”

  1. walter cashen May 16, 2013 2:06 pm

    Hi Alan,
    I purchased your covered call encyclopedia book a couple weeks ago and love it. If you can’t find what your looking for in there your probally not going to find it anywhere. I have been trying to apply your strategies ( mainly your exit strategies to weekly covered call writing ) keeping in mind that it is a weekly option and not a monthly.
    So far I am doing very well with it.

    My question to you is do you do any weekly covered call writing or have any literture on the subject? My main reason for liking weekly trades is the 52 pay days rather than 12 per year. Thank you very much and have a great day.

  2. Alan Ellman May 16, 2013 2:55 pm


    Thanks for your generous remarks.

    The BCI team is working on a formula for employing weeklys into our conservative approach to cc writing. We want to cover all bases before “allowing” these new products into our proven methodology.

    Our initial concerns:

    Limited (but growing) pool of stocks with weeklys

    Quadruple the trading commissions

    Less time for exit strategy executions

    More time management

    I firmly believe that there IS a place for weeklys and cc writing and will share our methodology in the near future.


  3. hanze September 5, 2015 1:56 pm

    I wish to share my support to Walter
    And encourage you to write a book
    On Weekly covered call writing
    I am sure it can be a high hit
    And well received from income starved

    As a new member I am delighted
    With your wealth of information

    But I am a true believer of being my
    Own CEO of my trading and although your
    Legwork of stocks and etfs selections
    Guidelines is useful and a good reference
    I find myself not using it for my weekly trading

    The best trading stocks all have weekly options
    Please concentrate your knowledge and penmanship
    On this subject and deliver that book


  4. Alan September 8, 2015 7:34 am


    Thanks for the suggestion. I have written six books in eight years and plan a bit of a break before a seventh. I’ve had other suggestions and will give all due consideration. I appreciate your valuable participationin our BCI community.


  5. John Cassidy October 18, 2021 4:07 am

    Good evening Alan,
    could I use the BCI collar calculator for my covered strangle trades.
    Thank you

    • Alan Ellman October 18, 2021 6:32 am


      We do not have a strangle calculator at this time. BCI has developed the following calculators found only at BCI:

      Covered call writing
      Selling cash-secured puts
      Poor Man’s Covered Call
      Collar strategy
      Portfolio overwriting
      Stock repair strategy

      We are currently working on a trading log with all exit strategies incorporated into the spreadsheet. We hope to have this tool available by the end of the year and it will be the first of its kind.