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Strike price selection is one of our 3 required skills. Choosing in-the-money strikes adds an additional component to our premiums and affords greater downside protection in bear and volatile markets. Calculations are highlighted using the Ellman Calculator
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It’s so ironic that you came out with this Podcast because I remember in years past that you touted your methodology as being beneficial in a bullish or sidewinding market but you didn’t sell it as a bear market methodology…. Are you now marketing this strategy as a bear market Strategy to only in the market call options? Or are there additional things a person can do beside sell in the market call options?
Joanna,
Here are links to a few of the articles I have published over the years on option-selling in bear market environments:
https://www.thebluecollarinvestor.com/comparing-covered-call-writing-and-put-selling-in-bear-markets/
https://www.thebluecollarinvestor.com/shorting-a-stock-a-viable-bear-market-strategy/
https://www.thebluecollarinvestor.com/how-to-generate-10-per-year-in-bear-markets-by-selling-stock-options/
https://www.thebluecollarinvestor.com/comparing-itm-calls-and-otm-puts-in-bear-markets/
https://www.thebluecollarinvestor.com/defensive-call-and-put-positions-in-bear-and-volatile-markets/
There are many more.
There is no one strategy is that right for every investor. Option-selling has been kind to me and my family over the past 2+ decades. I would never tell anyone which strategy to choose but I’m happy to share this information with our BCI community to assist investors in making their trading decisions.
Alan
Alan
You say that you like to set your profit level to between 2-4%. So, for OTM covered calls, is the 2-4% both the ROO as well as upside potential combined, or is your range 2-4% on the ROO, and 2-4% on the upside?
Thanks,
Joanna
Joanna,
I focus in on the ROO for all strikes, ITM, ATM and OTM. There is no requirement for upside.
Alan
Sorry I meant to say in the money call options