The Poor Man’s Covered Call: How to Re-Structure a Potentially Losing Trade into a Winning One

The Poor Man’s Covered Call: How to Re-Structure a Potentially Losing Trade into a Winning One

Apr 22, 2023 | Covered Call Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

The Poor Man’s Covered Call is a covered call writing-like strategy where a LEAPS option is used as a surrogate for the actual stock or exchange-traded fund (ETF). When structuring our PMCC trades, we must make sure it aligns with our required initial...
Understanding the Math When Rolling ITM Covered Calls Out-And-Up: A Real-Life Example with Utilities Select Sector SPDR Fund (NYSE: XLU) + Save the Date May 11th

Understanding the Math When Rolling ITM Covered Calls Out-And-Up: A Real-Life Example with Utilities Select Sector SPDR Fund (NYSE: XLU) + Save the Date May 11th

Apr 15, 2023 | Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution

All strategies, including covered call writing and selling cash-secured puts, have their pros and cons. The same holds true for the exit strategies associated with them. Several of our members have written to me over the years regarding a “can’t...
How to Record & Calculate ITM Covered Call Trades that Become OTM Trades

How to Record & Calculate ITM Covered Call Trades that Become OTM Trades

Apr 8, 2023 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

To properly analyze our covered call writing and put-selling trades, we must accurately record each step of the trades such that initial and final results are accurate. In this article, a hypothetical covered call trade which starts out in-the-money (ITM) but ends up...
Analyzing a 3-Income Covered Call Writing Trade: A Real-Life Example with Ready Capital Corp. (NYSE: RC)

Analyzing a 3-Income Covered Call Writing Trade: A Real-Life Example with Ready Capital Corp. (NYSE: RC)

Feb 25, 2023 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

Covered call writing with out-of-the-money (OTM) strikes provides the opportunity for 2 incomes streams, 1 from option premium and the other from share appreciation from current market value up to the OTM strike. Many of our eligible securities also generate quarterly...
Calculating Realized Option & Unrealized Stock Covered Call Returns at the End of a Contract Cycle

Calculating Realized Option & Unrealized Stock Covered Call Returns at the End of a Contract Cycle

Jan 28, 2023 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

Accurately calculating our covered call writing returns at the end of each contract cycle can be uncomplicated in some situations and more challenging in others. If we buy a stock at $48.00 and sell the $50.00 call at $1.50 and we allow exercise of an ITM strike...
Rolling-Out Poor Man’s Covered Call Trades: A Real-Life Example with Alphabet Inc. (Nasdaq: GOOG)

Rolling-Out Poor Man’s Covered Call Trades: A Real-Life Example with Alphabet Inc. (Nasdaq: GOOG)

Jan 21, 2023 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

When the Poor Man’s Covered Call (PMCC) strategy is employed, the short call is the active leg of the trade. If a strike is expiring in-the-money (ITM), we can roll the short call to a later expiration date. This article will detail 2 possible rolling trades...