beginners corner
Archive by Author

Was I Correct to Close My Successful Covered Call Trade? A Real-Life Example with Revolve Group, Inc. (NYSE: RVLV)

Alan K asked me to analyze a series of covered call trades he executed with RVLV over a 4-day period. Share price accelerated substantially once the trade was entered and a significant 4-day profit was realized. Let’s investigate all aspects of these trades.   Alan’s trades 6/21/2021: Buy 300 x RVLV at $61.83 6/21/2021: STO […]

22 Comments Continue Reading →

BCI PODCAST 71: Dividend Yield Should Be a Secondary Factor for Covered Call Writing

Watch Video: Listen To Audio Version: The BCI methodology screens stocks for option-selling using fundamental analysis, technical analysis and common-sense principles (like minimum trading volume). Using high dividend yield as a primary selection factor can be enticing but can also lead to poor trading decisions. This podcast will use MPLX as real-life example to detail […]

Leave a comment Continue Reading →

Analyzing Covered Call Writing Trades to Enhance Our Trading Skills: A Real-Life Example with The Clorox Company (Nasdaq: CLX)

One of the best ways to elevate our option-selling results is to analyze real-life trades. On August 3, 2021, Mark shared with me a series of trades he executed with CLX. His conclusion was that he was currently in a $250.00 net credit position. I will break down these trades into 3 stages. I ask […]

26 Comments Continue Reading →

Game Plan When Our Cash-Secured Puts are Exercised

When we sell cash-secured puts, we have selected a stock or ETF based on sound fundamental, technical and common-sense principles. We generally select out-of-the-money put strikes that meet our stated initial time-value return goal range. Once the trade is executed, we move to position management mode. This article will highlight the choices we have available […]

19 Comments Continue Reading →

Monitoring Our Collar Trades with the BCI Collar Calculator

The collar trade is a covered call writing trade with a protective put. The active leg of the trade is the short call. When exit strategy opportunities present, we make the appropriate trade adjustments. These can be incorporated into our BCI Collar Calculator. This article will highlight a hypothetical trade where the short call is […]

26 Comments Continue Reading →

BCI PODCAST 70: COMPARING CALL AND PUT SELLING STRATEGIES

Watch Video: Listen To Audio Version: Covered call writing and selling cash-secured puts are both outstanding low-risk approaches to generating cash flow. These strategies are similar but not precisely the same. This podcast will feature the pros and cons of each strategy as well as calculations using the BCI covered call (Ellman) calculator and the […]

2 Comments Continue Reading →

Rolling-Down to an ITM Strike in the Last Week of a Monthly Contract

When we roll-down our covered call trades, we generally do so to an out-of-the-money (OTM) strike to allow for share price recovery. However, in the final week of a monthly contract, if we hold a security, we will not use in the following contract month, it frequently makes sense to roll-down to an ITM strike. […]

14 Comments Continue Reading →

After-Hours and Pre-Monday Morning Market Trading Bid-Ask Spreads

Many members of our BCI community have commented on the wide and, therefore, unfavorable bid-ask spreads that are published before the markets open and after they close. This article will explain this deviation and address how to manage these scenarios.   What is after-hours trading? This is the exchange of securities outside the exchange’s normal […]

22 Comments Continue Reading →

BCI PODCAST 69 Technical Analysis with The Wendy’s Company NASDAQ WEN

Watch Video: Listen To Audio Version: A technical chart gives us insight into a stock’s trend and momentum. Certain events can also the technical picture in dramatic ways. In this podcast WEN had a bullish price chart for several months into late2018 to mid- 2019. There was a dramatic turnaround in July 2019 as a […]

Leave a comment Continue Reading →

Should Good News Discourage Us From Entering a Covered Call Trade?

We examine the BCI Premium Stock Report on the Sunday May 23, 2021, after expiration Friday, for our Monday trade selections. One of the securities we choose is Applied Materials, Inc. (Nasdaq: AMAT). On Monday morning, May 24th, AMAT gaps up well above the price movement of the S&P 500. Is AMAT now too expensive? […]

14 Comments Continue Reading →