Rolling-Down to an ITM Strike in the Last Week of a Monthly Contract

Rolling-Down to an ITM Strike in the Last Week of a Monthly Contract

Nov 6, 2021 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

When we roll-down our covered call trades, we generally do so to an out-of-the-money (OTM) strike to allow for share price recovery. However, in the final week of a monthly contract, if we hold a security, we will not use in the following contract month, it frequently...
Explaining “Bought-Up” Value When Rolling a Covered Call Out-And-Up

Explaining “Bought-Up” Value When Rolling a Covered Call Out-And-Up

Oct 16, 2021 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

One of our key covered call writing exit strategies is rolling an option when the strike is in-the-money at expiration and we want to retain our shares. We can roll-out to the same strike at a later date or out-and-up to a higher strike at a later date. For both....
Exit Strategies for Covered Call Writing: “Hitting a Triple” with XLU

Exit Strategies for Covered Call Writing: “Hitting a Triple” with XLU

Oct 2, 2021 | Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Trade Execution, Stock Option Strategies

Benefitting from exit strategies, in our covered call writing and put-selling portfolios, is the result of preparation and opportunity. Our 20%/10% guidelines for covered call writing protects us when share price declines and guides us as when to close the short...
Rolling-Down with a Few Hours to Expiration: A Real-Life Example with Energy Select Sector SPDR (NYSE: XLE)

Rolling-Down with a Few Hours to Expiration: A Real-Life Example with Energy Select Sector SPDR (NYSE: XLE)

Aug 28, 2021 | Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Trade Execution

The 20%/10% guidelines are essential to our covered call writing exit strategies. They represent parameters as when to buy back our short calls. A frequent inquiry I receive related to these parameters is whether to remove the 10% BTC limit orders in the last few days...
Can Price Movement Be Explained by Profit-Taking?: A Real-Life Example with Global X Funds Infrastructure Dev. (PAVE)

Can Price Movement Be Explained by Profit-Taking?: A Real-Life Example with Global X Funds Infrastructure Dev. (PAVE)

Aug 21, 2021 | Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies, Technical Analysis

On April 8,2021, Nathan shared with me his covered call writing trade with PAVE which was initiated 3 days earlier. This exchange-traded fund had a strong technical chart but the price started declining immediately after the trade was entered. Nathan commented that he...