Exit strategy execution for covered call writing and put-selling is the 3rd required skill needed to achieve the highest returns (stock and option selection are the other two). Knowing how and when to implement these position management trades will have a major impact on our ultimate success. In July 2020, Clark sent me a series […]
Rolling-Down On a Sharp Market Decline at the End of a Contract
Exit strategy opportunities may be created when there is a substantial 1-day market decline and we must be prepared to take advantage of these occasions. In June 2020, there was an 1800 point decline in the Dow 30 due to coronavirus concerns and national unrest related to police shootings. Many members of the BCI community […]
Using Covered Call Options and Stock Dividends in Low-Interest Rate Environments
Covered call writing can be crafted to meet a myriad of goals in a wide range of market conditions. In May of 2020, the 10-year Treasury Bond yield was 0.65%. Bank interest rates in several countries were negative. At the same time, dividend yield on Dow 30 and S&P 500 dividend-bearing stocks were triple that […]
The Poor Man’s Covered Call: Rolling Options in the Current Contract Month + 15% Holiday Discount Expiring Soon
Exit strategies are critical to our overall success whether using traditional covered call writing or the Poor Man’s Covered Call (PMCC). In this article, we will evaluate scenarios when share price both declines and accelerates creating rolling-down and rolling-up opportunities in the current contract month. The BCI PMCC Calculator will assist with the computations. […]
“Hitting a Double” With The Procter & Gamble Co. (NYSE: PG) + 15% Holiday Discount
After entering our covered call writing trades, we immediately enter our 20% buy-to-close (BTC) limit orders. This will automate the process to close our short calls in the first half of a monthly contract should share price decline significantly. This article will highlight such an opportunity that occurred with Procter & Gamble Company (NYSE: PG) […]
“Hitting a Double” on the Last Day of a Contract
Exit strategies for covered call writing are critical components to our overall success. One of the strategies available to us is hitting a double. This is where we buy back the short call and wait for the stock price to recover allowing us to re-sell the same option. This creates 2 income streams in the […]
Managing a Poor Man’s Covered Call Trade When Share Price Drops Below the LEAPS Strike
A typical Poor Man’s Covered Call (PMCC) trade involves buying a deep in-the-money call LEAPS option and selling short-term out-of-the-money call options which is protected by the long LEAPS position. In April 2020, Martin shared with me a PMCC trade he executed with PPL Corp. (NYSE: PPL) where share price declined below the LEAPS strike […]
Rolling Out-And-Up: 6-Week Returns
Option calculations help guide us to an accurate assessment of our covered call writing profits. It’s more meaningful to use percentages rather than dollar amounts when executing these calculations. For example, a $1000.00 profit on a $10,000.00 investment (10%) is much more significant than a $1000.00 return on a $100,000.00 investment (1%). That’s why percentages […]
When Call Strikes Move Deep In-The-Money Early in the -Contract: A Real-Life Example with BLK
Exit strategies for covered call writing is the 3rd required skill that must be mastered to achieve the highest possible returns. In January 2020, a member shared with me a trade she executed with BlackRock, Inc. (NYSE: BLK). The stock was trading at a cost-basis of $500.00 when the February 21, 2020 deep out-of-the-money (OTM) […]
Am I Losing Money When I Buy Back My Deep In-The-Money Strike?
Recognizing successful covered call writing trades is just as important as executing them. On January 17, 2020, Mark wrote to me about a covered call trade that he was analyzing with SolarEdge Technologies, Inc. (NASDAQ: SEDG). He was concerned that if he bought back a deep in-the-money call, he would suffer a significant loss. Mark’s […]
Podcast
- 50. Exit strategies Must Be Timed Properly
- 49. Analyzing a Multi Leg Covered Call Rolling Down Series of Trades
- 48. Rolling Deep OTM Cash Secured Puts
- 47. Rolling Up in the Same Contract Month
- 46. Should Delta Be the Sole Criteria for Covered Call Writing Strike Selection
- 45. Implied Volatility and Expected price Movement During the Life of Option Contracts
- 44. Can We Use ITM Strikes to Create a No Risk Covered Call Strategy?
- 43. Converting a Covered Call Trade to a Collar Trade
- 42. Why Was My OTM Put Exercised?
- 41. Collar Trades When Call Strikes Move Deep In The Money
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