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selling cash-secured puts calculations

Selling Cash-Secured Puts to Lower Cost basis

Selling cash-secured puts can be used to generate monthly cash flow and to buy a stock at a discount. It can also be used to lower the cost-basis of shares already owned. In November 2018, John shared with me a trade he was in with Halliburton Company (NYSE: HAL) using precisely this strategy. This article […]

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mean analyst ratings on yahoo Finance site

Mean Analyst Ratings (MAR)

The screening process for option-selling watchlists includes fundamental analysis, technical analysis and common-sense screens. The BCI team recently added a new screen, the mean analyst rating (MAR), to replace the Scouter Rating (risk/reward) which we had been using for years. This will add an “institutional” component to our analysis.   What is MAR? An investment […]

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stock repair strategy

Combining Covered Call Writing and the Stock Repair Strategy

One of our covered call writing exit strategies is converting dead money to cash profits (CDMCP). When share price is declining and under-performing the overall market, we first close the short call and then sell the stock. The cash generated from the sale of the underlying is then used to enter a new position. Another […]

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covered call writing exit strategies

Using The Ellman Calculator to Monitor “Hitting a Double” Results

One of our BCI covered call writing exit strategies is titled “hitting a double” This opportunity arises when share price declines after a covered call position is opened, short calls are bought back using our 20%/10% guidelines and then the same option is re-sold when share price rises. This article will highlight how to use […]

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covered call writing exit strategies

Analyzing a Rolling Down Trade During an Extreme Short-Term Market Decline

Exit strategy opportunities must be taken advantage of with our covered call writing and put-selling trades. When there is a significant overall market decline in the short-term, there will be losses. Our job, as option-sellers, is to mitigate those losses using our position management skill. On October 20, 2018, Alvin shared with me a series […]

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covered call writing and Theta

When Should We Execute Our Option-Selling Trades?

The 3-required skills for covered call writing and selling cash secured puts are stock selection, option selection and position management. We can also add timing of our trades as a secondary factor in enhancing our overall returns. These considerations are different for option-selling compared to traditional buy-and-sell portfolios. This article will highlight how and why […]

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Ellman Calculator

Should We Add a Short Put to Our Collar Trades?

A collar trade is a covered call trade with a protective put. Jim recently wrote to me asking about the efficacy of also selling an out-of-the-money put to help pay for the cost of the protective put. This article will analyze this series of trades to assess the pros and cons of adding that fourth […]

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Mean Analyst Rating (MAR): A New Addition to Our Premium Reports

The screening process for option-selling watchlists include fundamental analysis, technical analysis and common-sense screens. The BCI team is now adding a new screen the mean analyst rating (MAR) to replace the Scouter Rating we have been using for years. This will add an “institutional” component to our analysis.   What is MAR? An investment analyst […]

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technical analysis

An Annualized Return of 5000% and Feeling Miserable: Interpreting Our Covered Call Trades

Whether we are using covered call writing, put-selling or any other investment strategy, investor interpretation of results is an interesting topic to analyze. Is the glass half-full or half-empty? On October 5th, 2018, Gene wrote me about two covered call positions he was holding and expressed deep concern over the status of those trades. This […]

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strike price selection

Strike Price Selection When Selling Cash-Secured Puts: A Real-Life Example with WWE

Strike price selection is one of the 3-required skills when selling covered calls or cash-secured puts. This article will highlight the choices and rationale for our decisions when selling puts for World Wrestling Entertainment, Inc. (NYSE: WWE) on 9/24/2018.   Bullish price chart for WWE     Option-selling lowers our cost-basis and therefore we make […]

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