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Setting Up a Covered Call Portfolio-Diversification and Cash Allocation

A key mission statement in our Blue Collar investment strategy for covered call writing is risk management. An integral component needed to accomplish this goal is diversification and cash allocation. We want to own at least five different stocks in five different industry segments with no single equity or industry representing more than 20% of our portfolio. […]

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Constructing a Covered Call Portfolio Using Select Sector SPDRS

Select Sector SPDRs are unique exchange-traded funds that divide the S&P 500 into nine sector index funds.  They have the diversity of a mutual fund, the focus of a sector fund, and the tradability of a stock. Together, the nine Select Sector SPDRs represent the S&P 500 as a whole. However, each Select Sector SPDR can also […]

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The Case for 1-Month Options

I sell predominantly one-month options. This decision was NOT based on anything I read or was told, but rather on experience and common sense. Most stocks with options have at least four expiration cycles affiliated with them at any point in time…the current month, the next month and two more months further out based on […]

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Pump and Dump Scams

I’ll bet that each and every one of you has received an email that went something like this: IMAGINE IF YOU HAD THE CHANCE TO BUY A WAL-MART FRANCHISE IN MEXICO RIGHT WHEN IT FIRST OPENED ITS DOORS, AND ALL YOU NEEDED WAS A SMALL STAKE TO GET IN. HURRY, WE SEE THIS STOCK STARTING […]

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Rolling Strategies On Or Near Expiration Friday

With one week remaining before the expiration of the November option contracts I thought I’d use this week’s blog article to review the process of the rolling exit strategies. I will use a real-life example taken from our Weekly Stock Screen and Watch List. The figures you will see are based on the options chain […]

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What is “Left Tail Risk” and How is it Impacting our Stock Portfolios?

What’s going on here? Stock prices are historically inexpensive. Bond yields need a magnifying glass to detect. Earnings reports have been positively surprising for eleven consecutive quarters. There are trillions of institutional and retail investor dollars sitting on the sidelines waiting to propel the market directly to the moon. So why is the market trending […]

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Investor Psychology and the Need for Structured Plans

We just can’t sell our losers! Some will actually buy more shares to average down the cost basis. Why is that? If sticking your index finger into an outlet resulted in an uncomfortable shock would you then try it with your other fingers?  After you dipped your hand in water? Market psychology can turn an […]

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Dollar-Cost Averaging- An Investment Technique for You?

One of the most common questions asked of me is: “How do I get started if I don’t have a lot of money to invest?” Another is “What is the most conservative way to start selling covered calls?” These questions evoke the same sentiments I had when I first began educating myself in this strategy: […]

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Stock Splits and their Impact on our Option Contracts

Definition  A stock split is a change in the number of shares outstanding (in circulation). The number of shares is adjusted by the split ratio, e.g. 3 to 1. In this case, 100 shares splits to 300 shares, however the share price is cut in third. Thus, the cost and current value of the investment […]

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Penny Stocks: I’ll Have the Salad

You’re out for dinner in your favorite restaurant. The waiter hands you a menu and you immediately focus in on the salad column looking for a healthy meal. Hmmm….broiled salmon on the house salad….looks good. As you continue to study your choices you notice the young couple sitting at the table to your right. Piled […]

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