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Interpreting Exit Strategy Calculations Versus Final Calculations

Mastering option calculations is an essential skill needed to attain the very highest covered call writing returns. Although the Ellman Calculator will do most of the heavy lifting for us, understanding the reasons behind these calculations and when and how to apply them, will make us all more skilled investors. Recently a BCI member sent […]

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technical analysis for covered call writing

Covered Call Writing with a Biotech Company: A Real-Life Example with Argenx (NASDAQ: ARGX)

Covered call writing (as well as put-selling) premiums are directly related to the implied volatility of the underlying stock or exchange-traded fund (ETF). Biotech stocks are particularly volatile due to the success (or lack thereof) of the pharmaceuticals they are developing. Highly volatile underlyings represent the good news of higher premiums and the bad news […]

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covered call writing seminars

“Hitting a Double” or “Mid-Contract Unwind Exit Strategy”: Which Exit Strategy Did I Just Use?

Mastering exit strategies is the 3rd required skill for successful covered call writing and put-selling. On November 28, 2018, Nirav wrote to me regarding a series of trades he executed and wanted to know how to categorize the position management aspect of these trades. This article will highlight the differences between “hitting a double” and […]

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stock repair strategy

Combining Covered Call Writing and the Stock Repair Strategy

One of our covered call writing exit strategies is converting dead money to cash profits (CDMCP). When share price is declining and under-performing the overall market, we first close the short call and then sell the stock. The cash generated from the sale of the underlying is then used to enter a new position. Another […]

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covered call writing exit strategies

Using The Ellman Calculator to Monitor “Hitting a Double” Results

One of our BCI covered call writing exit strategies is titled “hitting a double” This opportunity arises when share price declines after a covered call position is opened, short calls are bought back using our 20%/10% guidelines and then the same option is re-sold when share price rises. This article will highlight how to use […]

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covered call writing exit strategies

Analyzing a Rolling Down Trade During an Extreme Short-Term Market Decline

Exit strategy opportunities must be taken advantage of with our covered call writing and put-selling trades. When there is a significant overall market decline in the short-term, there will be losses. Our job, as option-sellers, is to mitigate those losses using our position management skill. On October 20, 2018, Alvin shared with me a series […]

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covered call writing and Theta

When Should We Execute Our Option-Selling Trades?

The 3-required skills for covered call writing and selling cash secured puts are stock selection, option selection and position management. We can also add timing of our trades as a secondary factor in enhancing our overall returns. These considerations are different for option-selling compared to traditional buy-and-sell portfolios. This article will highlight how and why […]

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technical analysis

An Annualized Return of 5000% and Feeling Miserable: Interpreting Our Covered Call Trades

Whether we are using covered call writing, put-selling or any other investment strategy, investor interpretation of results is an interesting topic to analyze. Is the glass half-full or half-empty? On October 5th, 2018, Gene wrote me about two covered call positions he was holding and expressed deep concern over the status of those trades. This […]

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covered call writing trade management

Trade Management: A Real-Life Example with Brooks Automation, Inc. (NASDAQ: BRKS)

Once we enter our covered call writing trades, we immediately go into position management mode. In August, 2018, Mike generously shared with me a series of trades he executed using Brooks Automation, Inc and asked for my evaluation of his management of these trades. This article will detail and evaluate each aspect of the series […]

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covered call writing trades

Timing Our Covered Call Trades: Joanna’s Tale of “DOH”

When entering our covered call trades with new positions, we buy the stock and immediately sell the option. This can be accomplished by legging-in or using a buy-write combination form. This is an important guideline because we will be assured of capturing our initial time value return goals. On August 6th, 2018, Joanna shared with […]

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