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
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)
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 […]
How to Set Up a Portfolio of Nasdaq and S&P 500 Stocks in a User-Friendly Approach
Covered call writers and sellers of cash-secured puts know the importance of portfolio diversification. If one security under-performs, the others can compensate. This article will demonstrate how to craft a portfolio of large-cap tech and blue-chip companies for our option-selling strategies. Strategy goals Portfolio mix of blue-chip and technology companies User-friendly system Broad diversification […]
Using the Nasdaq-100 Volatility Index (VOLQ) in Covered Call Writing Decisions: A Real-Life Example with Invesco QQQ Trust (Nasdaq: QQQ)
One of the most popular exchange-traded funds (ETFs) used as underlyings for covered call writing is Invesco QQQ Trust (Nasdaq: QQQ) which consists of 100 of the largest domestic and international non-financial companies listed on the Nasdaq exchange. It is the ETF I have used the most over the past 2 decades of option-selling. This […]
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 […]
“Hitting a Double” on the Last Day of a Contract
Exit strategies for covered call writing are critical components to our overall success. One of the strategies available to us is hitting a double. This is where we buy back the short call and wait for the stock price to recover allowing us to re-sell the same option. This creates 2 income streams in the […]
Covered Call Writing with TLT: Generating Premium and Dividend Income
The main goal of covered call writing is to generate option premium cash flow. Many investors also seek to develop dividend income in addition to the option premium revenue. One security that presents a unique scenario is iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT). This exchange-traded fund produces dividend income twelve times a year with […]
Entering a Collar Trade: A Real-Life Example with iShares Silver Trust (NYSE: SLV) + New Product with Discount Coupon
The collar strategy is a covered call writing-like strategy where a protective put is added to the covered call trade. In this article, the initial structuring of a collar trade will be highlighted using SLV, an eligible exchange-traded fund in our Premium ETF Report in August 2020. The 3-legs of a collar trade STOCK: […]
Bear Market Concerns and our Option-Selling Portfolios
Covered call writing and selling cash-secured puts are stock option strategies with primary goals of income generation and capital preservation. Most of us are conservative investors who seek to beat the market on a consistent basis while minimizing portfolio risk. This is one of the mission statements of the BCI methodology. In the past few […]
Podcast
- 99. Anatomy of a Reverse Stock Split
- 98. Analyzing LEAPS Options for the Poor Man's Covered Call
- 97. Managing Our Poor Man's Covered Call Trades When Share Price Drops Substantially
- 96. Protecting Our Covered Call Trades: Protective Puts and In-the-Money Strikes
- 95. Covered Call Writing to Generate Premium and Dividend Income
- 94. Covered Call Writing Net Debit Limit Orders
- 93. WHEN CALL STRIKES MOVE DEEP ITM EARLY IN A CONTRACT
- 92. Selling Deep OTM Cash-Secured Puts to Create High-Probability Returns
- 91. Portfolio Overwriting Analyzed
- 90. Entering a Collar Trade
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