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Can We Manage Our In-The-Money Strikes to Create a No-Risk Investment Strategy?

Covered call writing is a low-risk cash-generating strategy. It is not a no-risk strategy. As we become educated and master the 3-required skills (stock selection, option selection and position management), it is understandable why BCI members try to figure out strategies that can convert low-risk to no-risk. Here is a common inquiry I receive from […]

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“Hitting a Double” with XBI: Earn $100 in Four Minutes

Position management (exit strategies) is one of the 3-required skills for successful covered call writing and put-selling. “Hitting a double” involves buying back the short call using our 20%/10% guidelines and then re-selling that same option when share price recovers. On 3/13/2019, Mario was kind enough to share with us his trades with SPDR S&P Biotech […]

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covered call writing with protective puts

Collar Trades When Call Strikes Move Deep In-The-Money: A Real-Life Example with TEAM

In August 2018, Duminda shared with me a successful collar trade he executed with Attlassian Corp (NASDAQ: TEAM). He was considering 2 exit strategies: Closing all legs of the trade and using the cash to enter a new position Allowing assignment and selling the put, if any value at expiration   Initial structuring of Duminda’s […]

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covered call writing calculations

Rolling Out-And-Up: Explaining “Bought-Up” Value

Covered call writing calculations should be as accurate as possible so that we can assess the success and feasibility of our trades. When we roll in-the-money (ITM) options out-and-up there is frequently an option debit which, on first glance, may make the trade appear to be a losing one. However, by factoring in the impact […]

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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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“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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