Exit strategies for covered call writing is a critical element necessary to maximize our returns. In December 2020, Alan K shared with me a rolling-down trade he executed with WSM and was curious as to the total trade status. This article will highlight the series of trades from 11/23/2020 to 12/9/2020 for the December 2020 […]
Should I Roll-Out When My Option is DITM Mid-Contract?
Exit strategy opportunities for covered call writing must be recognized and acted upon when indicated. It is important to understand when and how to react to these situations and determine the best exit strategy, if any. In October 2020, Patrick shared with me a covered call trade he had executed and was considering closing the […]
When Our Covered Call Strike Moves $1000.00 In-The-Money
This really happened. From March to August 2020, many of the large cap technology stocks were on fire. Thor shared with me a covered call trade he executed with Amazon.com, Inc. (NASDAQ: AMZN) where the strike moved $1000.00 in-the-money (ITM) as share price headed to the moon. As you read this article, see if you […]
Establishing Our Cost-Basis for Long-Term Holdings
When we initiate a covered call trade by first buying a stock and then selling a call option, our cost-basis, in the BCI methodology, is the lower of the stock price or strike price. If we sell an in-the-money (ITM) strike, we deduct the intrinsic-value component of the option premium from the share price bringing […]
Establishing Our Cost-Basis When Rolling Out-And-Up on 2 Different Days
One of our covered call writing exit strategies is rolling-out-and-up. We use this position management technique when our short call is in-the-money (ITM) as expiration approaches and we decide to retain the shares for the next contract month (or week). For example, had we bought a stock for $38.00 and sold the $40.00 call and […]
Establishing Our Cost-Basis in a Multi-Step Managed Trade
Covered call writing calculations are meaningful only when the correct stats are entered into our formulas (calculators). The cost-basis of a managed trade can be confusing as stock and option values are changing with each step of the trade series. In July 2020, Steve shared with me a series of trades he executed with KraneShares […]
Exit Strategies are Important but Must Be Timed Properly + Free Webinar Link
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. […]
Podcast
- 68. Volatility A Friend or Enemy to Covered call Writers and Put Sellers?
- 67. Should We a Short Put to Help Fund a Collar Trade?
- 66. Comparing the Cost-To-Close Covered Call Trades with Time-Value Return Goals
- 65: The 20%/10% Guidelines for Covered call Writing and Selling Cash-Secured Puts
- 64. Creating Dividend Like Income for Non Dividend Stocks
- 63. Rolling Decisions on Expiration Friday
- 62. Should I Unwind My Covered Call Trade 1 Week Prior to Contract Expiration?
- 61. Realized Versus Unrealized Capital Gains (Losses) for Covered Call Writing
- 60. Combining ITM Call Strikes & Stock Dividends to Protect in Bear Markets
- 59. ANALYZING 2 Month and 4-Day Covered Call Trades
Recent Comments