Aug 5, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Covered call writing exit strategies include scenarios when share price moves up or down. Our main enemy is share depreciation where we need to mitigate losses but we must also have the ability to enhance returns when share price rises under certain specific...
Jul 29, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Stock Option Strategies, Technical Analysis
Covered call writing generates monthly (or weekly) cash flow but it also reduces our cost basis. The latter result is the reason why covered call writing increases our chances of a successful trade more so than simply owning the stock. Historical data tells us that in...
Jul 15, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Put-selling
Selling options (covered call writing and selling cash-secured puts) will result in a positive outcome in the first four of the following five scenarios: Stock price moves up significantly Stock price moves up slightly Stock price remains the same Stock price moves...
Jun 24, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
The mid-contract unwind (MCU) exit strategy is a position management maneuver we use to generate a second income stream in the same month with the same cash investment. The opportunity arises when share price moves significantly higher than the short call strike in...
Jun 17, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
Never sell a covered call option or cash-secured put if there is an earnings report due out prior to contract expiration. This is one of the golden rules of the BCI methodology. We know that a report that disappoints generally did not meet market consensus regarding...
Jun 10, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
In our BCI methodology we favor Monthly or Weekly options for our short covered call writing positions. I am frequently asked why I don’t utilize LEAPS options (expire 9 – 24 months in the future) to garner a much higher premium and perhaps require less...
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