Covered call writing calculations are meaningful only when the correct stats are entered into our formulas (calculators). The cost-basis of a managed trade can be confusing as stock and option values are changing with each step of the trade series. In July 2020, Steve shared with me a series of trades he executed with KraneShares […]
BCI PODCAST 40 Covered Puts are Not Cash Secured Puts
Watch Video: Listen To Audio Version: Retail investors may confuse 2 very different strategies that sound the same. Covered puts is a risky strategy that involves shorting a stock and selling a put option. The trader is obligated to replace the “borrowed” stock and buy the shares at the strike price. Selling cash-secured puts is […]
Delta and Strike Price Selection
Strike price selection is the 2nd of our 3-required skills for covered call writing and selling cash-secured puts. I am frequently asked which Delta to use as a guide to a specific strike price. In this article, we will review the factors that guide us to the most appropriate strike price and the role Delta […]
BCI PODCAST 39: Using the VIX for Strike Price Selection
Watch Video: Listen To Audio Version: Strike price selection for covered call writing and selling cash-secured puts is the 2nd of the 3 required skills. The CBOE Volatility Index or VIX is a key statistic we should evaluate when making these decisions. It should be used in conjunction with overall market assessment, economic data and […]
Exit Strategies are Important but Must Be Timed Properly + Free Webinar Link
Exit strategy execution for covered call writing and put-selling is the 3rd required skill needed to achieve the highest returns (stock and option selection are the other two). Knowing how and when to implement these position management trades will have a major impact on our ultimate success. In July 2020, Clark sent me a series […]
BCI PODCAST 38: Evaluating the Cost-To-Close When a Strike Moves Deep In-The-Money
Watch Video: Listen To Audio Version: After entering a covered call trade and the stock price accelerates exponentially, the cost-to-close our position appears prohibitively high. This podcast will use a real-life example with SolarEdge technologies, Inc. (NASDAQ: SEDG) to break down the total premium into time-value and intrinsic-value components and detailing if and when to […]
Rolling-Down On a Sharp Market Decline at the End of a Contract
Exit strategy opportunities may be created when there is a substantial 1-day market decline and we must be prepared to take advantage of these occasions. In June 2020, there was an 1800 point decline in the Dow 30 due to coronavirus concerns and national unrest related to police shootings. Many members of the BCI community […]
BCI PODCAST 37: Selling the Same Option Twice in the Same Contract Month
Watch Video: Listen To Audio Version: After entering a covered call trade, share price may decline jeopardizing the success of our trade. Frequently, we must take action to mitigate. This podcast will focus in on the “hitting a double” exit strategy where the short call is bought back and the same option re-sold for a […]
Using Covered Call Options and Stock Dividends in Low-Interest Rate Environments
Covered call writing can be crafted to meet a myriad of goals in a wide range of market conditions. In May of 2020, the 10-year Treasury Bond yield was 0.65%. Bank interest rates in several countries were negative. At the same time, dividend yield on Dow 30 and S&P 500 dividend-bearing stocks were triple that […]
BCI PODCAST 36. Timing Our Covered Call Trades
Watch Video: Listen To Audio Version: After a stock is purchased, when is the best time to sell the option? Should we wait for share appreciation to make more money on the trade. This podcasts breaks down the 3 possible outcomes and incorporates the option Greeks into our understanding of how and why to manage […]
Podcast
- 50. Exit strategies Must Be Timed Properly
- 49. Analyzing a Multi Leg Covered Call Rolling Down Series of Trades
- 48. Rolling Deep OTM Cash Secured Puts
- 47. Rolling Up in the Same Contract Month
- 46. Should Delta Be the Sole Criteria for Covered Call Writing Strike Selection
- 45. Implied Volatility and Expected price Movement During the Life of Option Contracts
- 44. Can We Use ITM Strikes to Create a No Risk Covered Call Strategy?
- 43. Converting a Covered Call Trade to a Collar Trade
- 42. Why Was My OTM Put Exercised?
- 41. Collar Trades When Call Strikes Move Deep In The Money
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