Mastering option calculations is an essential skill needed to attain the very highest covered call writing returns. Although the Ellman Calculator will do most of the heavy lifting for us, understanding the reasons behind these calculations and when and how to apply them, will make us all more skilled investors. Recently a BCI member sent […]
Covered Call Writing with a Biotech Company: A Real-Life Example with Argenx (NASDAQ: ARGX)
Covered call writing (as well as put-selling) premiums are directly related to the implied volatility of the underlying stock or exchange-traded fund (ETF). Biotech stocks are particularly volatile due to the success (or lack thereof) of the pharmaceuticals they are developing. Highly volatile underlyings represent the good news of higher premiums and the bad news […]
Stock Repair Strategy: Breakeven Versus Loss-Reduction Objectives
Call options can be used to reduce losses on long stock positions. Depending on the degree our share value has declined, our target can be to lower our breakeven point or to lock-in but reduce losses. In December 2018, Sunny shared a stock repair trade he was considering involving FedEx Corp. (NYSE: FDX). At the […]
“Hitting a Double” or “Mid-Contract Unwind Exit Strategy”: Which Exit Strategy Did I Just Use?
Mastering exit strategies is the 3rd required skill for successful covered call writing and put-selling. On November 28, 2018, Nirav wrote to me regarding a series of trades he executed and wanted to know how to categorize the position management aspect of these trades. This article will highlight the differences between “hitting a double” and […]
Selling Cash-Secured Puts to Lower Cost basis
Selling cash-secured puts can be used to generate monthly cash flow and to buy a stock at a discount. It can also be used to lower the cost-basis of shares already owned. In November 2018, John shared with me a trade he was in with Halliburton Company (NYSE: HAL) using precisely this strategy. This article […]
Combining Covered Call Writing and the Stock Repair Strategy
One of our covered call writing exit strategies is converting dead money to cash profits (CDMCP). When share price is declining and under-performing the overall market, we first close the short call and then sell the stock. The cash generated from the sale of the underlying is then used to enter a new position. Another […]
Using The Ellman Calculator to Monitor “Hitting a Double” Results
One of our BCI covered call writing exit strategies is titled “hitting a double” This opportunity arises when share price declines after a covered call position is opened, short calls are bought back using our 20%/10% guidelines and then the same option is re-sold when share price rises. This article will highlight how to use […]
Analyzing a Rolling Down Trade During an Extreme Short-Term Market Decline
Exit strategy opportunities must be taken advantage of with our covered call writing and put-selling trades. When there is a significant overall market decline in the short-term, there will be losses. Our job, as option-sellers, is to mitigate those losses using our position management skill. On October 20, 2018, Alvin shared with me a series […]
When Should We Execute Our Option-Selling Trades?
The 3-required skills for covered call writing and selling cash secured puts are stock selection, option selection and position management. We can also add timing of our trades as a secondary factor in enhancing our overall returns. These considerations are different for option-selling compared to traditional buy-and-sell portfolios. This article will highlight how and why […]
An Annualized Return of 5000% and Feeling Miserable: Interpreting Our Covered Call Trades
Whether we are using covered call writing, put-selling or any other investment strategy, investor interpretation of results is an interesting topic to analyze. Is the glass half-full or half-empty? On October 5th, 2018, Gene wrote me about two covered call positions he was holding and expressed deep concern over the status of those trades. This […]
-
Interpreting Exit Strategy Calculations Versus Final Calculations
-
Ask Alan #160 – Comparing Protective Puts and Position Unwinding as Strike Moves Deep In-The-Money
-
Covered Call Writing with a Biotech Company: A Real-Life Example with Argenx (NASDAQ: ARGX)
-
In-The-Money Covered Calls: Intrinsic Value Protects Time Value: A Real-Life Example with TEAM + New Tool Coming Soon
-
Structuring a Poor Man’s Covered Call Trade with The Coca-Cola Company
-
The New Stock Market- Algorithmic and High Speed Trading
-
Options That Expire Weekly and Conventional Expiration Cycles
-
Why the 3% Guideline Applies to Puts but Not to Call Options
-
Earnings Pre-Announcements Explained and Categorized
-
Tax Implications of Writing Covered Calls against Long-Term Holdings
-
Mariog Trading Experiences - 7/18/19 Jack, Section
-
Jay Hey friends, To the extent seasonality plays an
-
Alan Ellman Premium members: This week's 8-page repo
-
-
Jack Alan, 1) I have kept scrupulous records and bel
