beginners corner
Archive by Author

Using Implied Volatility to Determine Safe Strikes for Portfolio Overwriting: A Real-Life Example with PayPal Holdings, Inc. (Nasdaq: PYPL)

Portfolio overwriting is a covered call writing-like strategy. We use it with our long-term buy-and-hold portfolios in non-sheltered accounts with the objectives to generate additional cash-flow while still retaining the shares. Share retention is a required objective to avoid potential negative capital gains tax issues. In my books and online videos, I suggest a 6% […]

4 Comments Continue Reading →

Rolling Out and Up to ITM and OTM strikes: A Real-Life Example with Invesco QQQ Trust (Nasdaq: QQQ) + Trade Management Calculator Coupon Expires 5/15/2022

When our covered call writing strikes are expiring in-the-money (ITM), and we want to retain the underlying shares for the next contract period, we can roll the option forward. This involves buying back the current short call(s) and selling the next month (or week etc.) strike. If we roll-out, we always roll-out to an ITM […]

13 Comments Continue Reading →

BCI PODCAST 80: Using the VIX to Achieve Higher Option-Selling Returns

Watch Video: Listen To Audio Version: Market volatility results in higher option premiums for option-sellers but also represents enhanced risk. This podcast analyzes ways to manage high and low VIX stats using a real-life example with Boyd gaming (BYD). Strike selection, stock selection and initial time-valure return goal range are topics discussed. BECOME A BCI […]

Leave a comment Continue Reading →
Ask Alan

Ask Alan 194: Mitigating Losses by Rolling Down During a Severe Market Decline

 Alan answers a question posed by Elliot, who asks: Hi Alan, With COVID-19, inflation and rising interest rates concerns, the market has plummeted dramatically. Can you share the type of exit strategies we can use in these type of market conditions? Help! Elliot During the January 2022 contracts, the S&P 500 declined by 5.5%. […]

Leave a comment Continue Reading →

Determining Our Goal Before Unwinding Both Legs of a Covered Call Trade: A Real-Life Example with Qualcomm Incorporated (Nasdaq: QCOM) + Trade Management Calculator Discount Coupon Expiring Soon

When share price accelerates exponentially with our covered call writing stocks, the strike moves deeper in-the-money. Although the intrinsic-value component of the option premium rises, the time-value component approaches zero. This creates an opportunity to consider our mid-contract unwind exit strategy. Before implementing this, or any others in our exit strategy arsenal, we must identify […]

4 Comments Continue Reading →

Exit Strategy Considerations When a Strike Moves Deep ITM Early in a Contract + The BCI Trade Management Calculator/New Book Now Available- Discount Coupons

When our covered call writing and put-selling trades start out much better than anticipated, Blue Collar Investors immediately evaluate our exit strategy arsenal to see if we can achieve even higher returns. On 11/12/2021, one of our premium members shared with me a trade he had initiated with Big 5 Sporting Goods Corp. (Nasdaq: BGFV) […]

25 Comments Continue Reading →

BCI PODCAST 79: Adjusting Target Goals with ETFs

Watch Video: Listen To Audio Version: Exchange-traded funds represent baskets of stocks. They are generally less volatile than individual stocks and therefore provide lower option premiums. When defining our initial time-value return goal range, we must factor this in so as to properly manage our portfolio results. A real-life example with SPDR% S&P Homebuilders ETF […]

Leave a comment Continue Reading →

Analyzing the Cost-To-Close a Covered Call Trade Mid-Contract: A Real-Life Example with NVDIA Corp. (Nasdaq: NVDA)

One of our covered call writing exit strategies is the mid-contract unwind (MCU) exit strategy. We generally implement this approach when share price accelerates significantly leaving the short call deep in-the-money (ITM).   Breaking down the components of a deep ITM strike As the strike moves deeper in-the-money as share price rises, the time-value component […]

15 Comments Continue Reading →

Rolling-Out to Impressive Profits: A Real-Life Example with NVIDIA Corp. (Nasdaq: NVDA)

Exit strategies for covered call writing will elevate returns and mitigate losses. When share price accelerates dramatically, we can take advantage of these opportunities by rolling our options out or out-and-up. In November of 2021, Calvin shared with me a series of trades he executed with NVDA which demonstrated several rules and guidelines that will […]

17 Comments Continue Reading →

BCI PODCAST 78: REITS: Good Covered Call Writing Candidates?

Watch Video: Listen To Audio Version: Option-sellers may be attracted to the high dividend yield of real estate investment trusts (REITs).This podcast addresses portfolio diversification, dividend yield, implied volatility and calculations while using PennyMac Mortgage Investment Trust (PMC) as a real-life example. BECOME A BCI MEMBER TODAY: PREMIUM MEMBERSHIP SEE BCI COURSE & PRODUCTS : […]

Leave a comment Continue Reading →