Comments on: BCI Podcast 1. Hitting a Double” Calculations with The Ellman Calculator https://www.thebluecollarinvestor.com/bci-podcast-1-hitting-a-double-calculations-with-the-ellman-calculator/ Learn how to invest by selling stock options. Mon, 31 Aug 2020 10:22:13 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/bci-podcast-1-hitting-a-double-calculations-with-the-ellman-calculator/#comment-326814 Mon, 31 Aug 2020 10:22:13 +0000 https://www.thebluecollarinvestor.com/?p=19528#comment-326814 In reply to Larry.

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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By: Larry https://www.thebluecollarinvestor.com/bci-podcast-1-hitting-a-double-calculations-with-the-ellman-calculator/#comment-326604 Sun, 30 Aug 2020 22:55:44 +0000 https://www.thebluecollarinvestor.com/?p=19528#comment-326604 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!!

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