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BCI Podcast 1. Hitting a Double” Calculations with The Ellman Calculator

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Exit strategies will elevate our covered call writing results to the highest possible levels. This podcast will highlight the “hitting a double” exit strategy which seeks to generate 2 income streams in the same contract month with the same investment. It also demonstrates how the multiple tabs of the Ellman Calculator can monitor these trades.

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

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2 Responses to “BCI Podcast 1. Hitting a Double” Calculations with The Ellman Calculator”

  1. Larry August 30, 2020 6:55 pm #

    Hi Alan,
    Thanks so much for this podcast. 2 questions:
    At minute 6:35, could you explain the net option credit of $2.60 in the third row of the multiple tab? The first row is $2, which is your initial credit. The second row is $1.60, because that’s $2 in new credit minus $0.40 to buy back. For the third row, you said the new credit is $1, so shouldn’t the third row say $0.60 ($1 – $0.40) instead of $2.60?

    Question 2 –
    Does the 20%/10% rule still apply in subsequent trades when hitting doubles and triples? In other words, how do you when to buy back the 2nd option sold in the same month, when it hits 20%/10% of the **1st** option’s original price?

    Thanks again!!

    • Alan Ellman August 31, 2020 6:22 am #

      Larry,

      1. The $2.60 represents the cumulative option credit once the final option was sold: $2.00 -$0.40 + $1.00 = $2.60.

      2. The 20%/10% guidelines apply to the last option premium, in this case, $1.00. We would set up BTC limit orders of either $0.20 or $0.10 depending on the time remaining until expiration. We always update our management decisions based on the most current information.

      Alan

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