When the Poor Man’s Covered Call (PMCC) strategy is employed, the short call is the active leg of the trade. If a strike is expiring in-the-money (ITM), we can roll the short call to a later expiration date. This article will detail 2 possible rolling trades with GOOG, 1 for rolling-out to the same strike […]
How to Enter & Calculate Rolling-Out-And-Down Cash-Secured Put Trades: A Real-Life Example with Invesco QQQ Trust (Nasdaq: QQQ)
When selling out-of-the-money (OTM) cash-secured puts, we calculate our initial time-value returns with this formula: % return = Put premium/ (put strike – put premium) When incorporating exit strategies into our strategy, we must properly enter these adjustments into our spreadsheets such that the calculations will be accurate and properly archived. What is rolling-out […]
Exercising Call Options to Capture Dividends: A Reasonable Action or Investor Error?
Dividend capture is the main reason for early exercise of our covered call writing trades. More specifically, ex-dividend dates are the times most susceptible to early exercise and having our shares sold at the strike price. This article will analyze the profitability or lack thereof of taking such action. On July 3, 2022, Graham shared […]
Calculating Mid-Contract Covered Call Writing Trade Status: A Real-Life Example with Bristol-Myers Squibb Comp. (NYSE: BMY)
After entering our covered call writing and put-selling trades, we can calculate the current status of our trades mid-contract with a few simple entries into our Trade Management Calculator. In this article, a real-life covered call writing example with BMY will be highlighted. Hypothetical examples of closing winning and losing trades mid-contract will be detailed […]
Entering and Adjusting Our Covered Call Trades Using the BCI Trade Management Calculator: A Real-Life Example with WBA
Entering, managing and archiving our covered call writing and put-selling trades are critical to our overall success as well as allowing us to learn and benefit from our investment history. To demonstrate how to achieve a high level of organization and management of our trades, this article will highlight a real-life series of trades with […]
20%/10% Guidelines: “Hitting a Double” in the Same Day: A Real-Life Example with Consumer Staples Select Sector SPDR (NYSE: XLP)
After entering our covered call writing trades, we immediately enter our 20%/10% BTC (buy-to-close), GTC (good-until-cancelled) limit orders. If and when these thresholds are reached (resulting from share price decline) are short calls will be closed (bought back). At that point, we can plan our next steps to mitigate losses or turn losses into gains. […]
Setting Our 20%/10% Guidelines After Rolling an Option Out or Out-And-Up
Rolling-out is a covered call writing exit strategy we frequently use when a strike is expiring in-the-money (ITM) and we want to retain the underlying shares for the next contract cycle. After closing the short call in the current month prior to rolling, a new trade with the same security is set up in our […]
How to Enter & Calculate Closing a Weekly Put Trade After Rolling the Option in the Same Contract Cycle + Alan’s Wealth365 Webinar Registration Link
When we sell cash-secured puts, we are undertaking the contractual obligation to buy shares at the strike price by the expiration date. The option seller (that’s us) sets those parameters. In return, we receive a cash premium. The implementation of exit strategy opportunities allows us to maximize the success of our trades. This article will […]
How to Manage a 5.3% Mid-Contract Unrealized Gain: A Real-Life Example with BHP Group Limited (NYSE: BHP) + Alan’s Wealth365 Webinar Registration Link
When we have a maximum mid-contract unrealized gain on a trade, there are opportunities when we can generate additional income streams and, thereby, enjoy higher than initial maximum returns. There are also scenarios when we should take no action and continue to monitor these trades. On 1/19/2022, Patrick shared with me such a trade he […]
How to Enter Our Rolling-Out-And-Up Trades into Our Monthly Trading Logs
In our last blog article, we discussed how to enter our rolling-out trades into our covered call writing trading logs. This article will highlight the additional considerations when rolling our covered call trades out-and-up. Trade log challenges when rolling-out-and-up We are combining 2 months of option premiums: how do we break this down? What […]
Podcast
- 96. Protecting Our Covered Call Trades: Protective Puts and In-the-Money Strikes
- 95. Covered Call Writing to Generate Premium and Dividend Income
- 94. Covered Call Writing Net Debit Limit Orders
- 93. WHEN CALL STRIKES MOVE DEEP ITM EARLY IN A CONTRACT
- 92. Selling Deep OTM Cash-Secured Puts to Create High-Probability Returns
- 91. Portfolio Overwriting Analyzed
- 90. Entering a Collar Trade
- 89. Am I Losing Money When I Buy Back My Deep ITM Covered Call Options?
- 88. Creating a Portfolio of Weekly Cash-Secured Puts
- 87. Bear Market Concerns and Our Option Selling Portfolios
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