beginners corner
Archive by Author

BCI PODCAST 100: Analyzing LEAPS for The Poor Man’s Covered call Strategy (PMCC)

Watch Video: Listen To Audio Version: The PMCC allows investors to enter a covered call at a much lower cost than traditional covered call writing. There are pros and cons to this strategy. This podcast will detail how to use Delta to assist in the selection of our long LEAPS position. What is the best […]

Leave a comment Continue Reading →

Technical Analysis for Options: A Real-Life Example with Deckers Outdoor Corp. (NYSE: DECK)

In our BCI methodology, we use a 3-pronged approach to screening for our covered call writing and put-selling portfolios: Fundamental analysis (sales & earnings Technical analysis (trend, volume and momentum) Common-sense principles (minimum trading volume, avoiding earnings reports among others) This article will focus in on the technical analysis of DECK on 10/20/2022 and show […]

6 Comments Continue Reading →

Establishing 84% Probability of Success Put Trades in Bear Markets

Selling deep out-of-the-money cash-secured puts in bear markets will provide us with additional protection to the downside in return for lower, but still significant, option returns. This article will highlight the use of Delta and implied volatility to establish a framework for executing such trades with n 84% probability of success.   What is Delta? […]

25 Comments Continue Reading →

How to Calculate Dividends into Our Covered Call Writing Calculations

Covered call writing is a low-risk, cash generating option-selling strategy. Premium is generated by undertaking the contractual obligation to sell our shares at a price (strike price) and date (expiration date) that we, the option sellers, determine. Frequently, dividend distributions represent an additional potential source of income. This article will use a real-life example with […]

12 Comments Continue Reading →
Ask Alan

Ask Alan 204: Multiple Exit Strategies with a Weekly Put Trade

Alan answers a question posed by Bill, who asks: Alan, In the attached hypothetical example, can you explain how to enter and calculate closing a weekly put trade after rolling-up in the same week using the Trade Management Calculator? Thank you, Bill This video addresses how to enter and archive a weekly put trade which […]

Comments Off on Ask Alan 204: Multiple Exit Strategies with a Weekly Put Trade Continue Reading →

BCI PODCAST 99: Anatomy of a Reverse Stock Split

Watch Video: Listen To Audio Version: Various corporate events like stock splits, mergers and acquisitions will results in share price changes that require the Options Clearing Corporation to adjust option contracts such that buyers and sellers of calls and puts are made whole. This podcast focuses in on reverse stocks splits, ther reasons they are […]

Comments Off on BCI PODCAST 99: Anatomy of a Reverse Stock Split Continue Reading →

Estimating Our Breakeven Price Points When Establishing Our Poor Man’s Covered Call Trades: A Real-Life Example with Apple, Inc. (Nasdaq: AAPL)

When initiating our Poor Man’s Covered Call (PMCC) trades, we can estimate our breakeven (BE) price points. It gets more complicated as more layers are added to the trades over the months and, perhaps, years that the trade continues. This article will detail the formula used to generate this BE price point and use a […]

16 Comments Continue Reading →

Analyzing a 3-Income Covered Call Writing Trade: A Real-Life Example with Ready Capital Corp. (NYSE: RC)

Covered call writing with out-of-the-money (OTM) strikes provides the opportunity for 2 incomes streams, 1 from option premium and the other from share appreciation from current market value up to the OTM strike. Many of our eligible securities also generate quarterly dividends and trades can be established with 3-income stream potential. Such a trade was […]

8 Comments Continue Reading →

BCI PODCAST 98: Analyzing LEAPS Options for the Poor Man’s Covered Call

Watch Video: Listen To Audio Version: The Poor Man’s Covered call strategy uses LEAPS options as a replacement for stock and ETF shares. The cost to enter the trade is much lower than using traditional covered call writing. of course, there are pros & cons to this PMCC strategy. This podcast addresses how to select […]

2 Comments Continue Reading →

Review of Dividend Dates & Their Impact on Our Covered Call Trades

The main reason for early exercise of our covered call writing options relates to corporate dividends. The key date to be aware of is the ex-dividend date. This article will clarify and define the dates related to corporate dividends and also discuss an anomaly related to special dividends.   Early exercise of our covered call […]

16 Comments Continue Reading →