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Strike Price Selection- A Critical Covered Call Decision

Covered call writing requires a logical sequence of stock and option decisions. Once we have screened our stocks to locate the greatest performing stocks in the greatest performing industries we must make a decision as to which strike price to use. Our choices include: in-the-money at (near)-the-money out-of-the-money Let’s look at the options chain for […]

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Covered Call Writing: Managing Stocks That Have Gapped Down

Every once in a while, when using our covered call writing strategy a stock will gap up or down. A gap is a break between prices on a chart that occurs when the price of a stock makes a sharp move up or down with no trading occurring in between. Gaps can be created by factors such as […]

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Constructing Your Covered Call Portfolio During Earnings Season

From mid-January to mid-February many of our watch list stocks will be reporting earnings rendering these equities ineligible for covered call writing at least until after the report is announced. This does NOT mean that our money will stay on the sidelines for a month (unless market conditions dictate this action). Blue Collar Investors are great people […]

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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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