Rolling-down is one of our frequently used covered call writing exit strategies. During the January 2022 contracts, there was a 5% market decline due to COVD-19, inflation and interest rate concerns. This article will highlight a rolling-down strategy I implemented with Healthcare Select Sector SPDR (NYSE: XLV) in one of my portfolios where a 4.68% […]

Mitigating Losses by Rolling-Down During a Severe Market Decline: The BCI Trade Management Calculator in Action + New Book Discount Code + Free Webinar Registration Link
Posted on June 25, 2022 by Alan Ellman in Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

The Poor Man’s Covered Call LEAPS Selection: A Real-Life Example with SPDR S&P 500 ETF Trust (NYSE: SPY)
Posted on February 12, 2022 by Alan Ellman in Exchange-Traded Funds, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Before initiating a poor man’s covered call trade (PMCC), we must first master all aspects of the strategy including understanding the pros and cons inherent in this system. Once we have made a decision that this strategy is appropriate for our portfolios, the next step is to analyze our initial trade structuring calculations. We want […]

Collar Strategy Using Weekly Calls and Monthly Puts: A Real-Life Example with LABU
Posted on January 1, 2022 by Alan Ellman in Exchange-Traded Funds, Option Trading Basics, Options Calculations, Options Trade Execution, Put-selling, Stock Option Strategies
The collar strategy is a covered call writing-like strategy where protective puts are added to our covered call trades. This creates a ceiling (the short call) and a floor (the long put). Typically, the expiration dates of the calls and puts are the same. We must also ensure that the call credit and put debit […]

Best Technology ETFs for Our Option-Selling Portfolios: QQQ and XLK
Posted on October 9, 2021 by Alan Ellman in Exchange-Traded Funds, Fundamental Analysis, Investment Basics, Option Trading Basics, Stock Option Strategies, Technical Analysis
When seeking to add a technology presence to our covered call writing and put-selling portfolios, we can do so by using exchange-traded funds (ETFs) based on technology benchmarks. Two such reliable ETFs are Technology Select Sector SPDR Fund (NYSE: XLK) and Invesco QQQ Trust (Nasdaq: QQQ). This article will compare the 2 funds to assist […]

Exit Strategies for Covered Call Writing: “Hitting a Triple” with XLU
Posted on October 2, 2021 by Alan Ellman in 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 calls. This allows us take further action including selling the stock, waiting to “hit […]

Rolling-Down with a Few Hours to Expiration: A Real-Life Example with Energy Select Sector SPDR (NYSE: XLE)
Posted on August 28, 2021 by Alan Ellman in 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 of a contract. The thinking is that the cost-to-close […]

Can Price Movement Be Explained by Profit-Taking?: A Real-Life Example with Global X Funds Infrastructure Dev. (PAVE)
Posted on August 21, 2021 by Alan Ellman in 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 read in a technical analysis book that when share price breaks out […]

Application of the 20%/10% Guidelines Within a Broad Range of Implied Volatility Securities
Posted on August 14, 2021 by Alan Ellman in Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Trade Execution, Stock Option Strategies
I recently published an article titled Managing Implied Volatility Risk by Establishing an Initial Time-Value Return Goal Range. This article served as a catalyst for several inquiries from our members asking if the BCI 20%/10% guidelines applied to high volatility securities in terms of the protection we receive from declining share values. This article will […]

Managing Implied Volatility Risk by Establishing an Initial Time-Value Return Goal Range + Webinar Login Link
Posted on August 7, 2021 by Alan Ellman in Exchange-Traded Funds, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Investing, Stock Option Strategies
When screening for eligible securities for covered call writing and selling cash-secured puts, we must establish how much risk we are willing to incur. There is no right or wrong here as the appropriate amount will vary from investor-to-investor. To determine security risk, we can look up implied volatility (IV) stats but that will simply […]

Dividends and After-Hour News Causing Exercise of OTM Call Strikes: A Real-Life Example with Financial Select Sector SPDR Fund (NYSE: XLF)
Posted on May 29, 2021 by Alan Ellman in Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
On December 21, 2020, Donna shared with me a successful trade she executed with XLF. What made this trade interesting was that the option was exercised after expiration when the strike closed out-of-the-money. This article will examine the reasons for this unusual circumstance. Donna’s trade 11/24/2020: Buy 300 x XLF at $28.59 11/24/2020: STO 3 […]
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- 83. Setting Up a Portfolio of Nasdaq and S&P 500 Stocks in a User-Friendly Manner
- 82. Risky Stocks Can Result In Challenging Decisions
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- 77. Buyers Have Rights and Sellers Have Obligations- Covered Call Writing Explained
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- 75. Reverse Stock Splits Understanding Contract Adjustments
- 74. Strike Selection Using Technical Analysis and Market Assessment
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