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covered call writing exit strategies and contract adjustments

Rolling Down And Stock Splits: A Real Life Example

Covered call writing positions can be altered by exit strategies or contract adjustments. Contract adjustments are alterations that are typically made to option contracts when the underlying stock undergoes a stock split, pays a special cash and/or stock dividend or distribution, or is involved in a merger, acquisition or corporate reorganization. Sometimes they are impacted by […]

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Covered call writing calculations

Calculating Future Returns Using Delta

Understanding option calculations is an integral part of the BCI methodology. Using the Ellman Calculators (Basic and Elite versions) will facilitate the process but knowing the “how” and “why” of these numbers will make us all better investors. This article was inspired by Peter, one of our members. He was concerned about the potential drop […]

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calculating covered call writing returns using the Ellman Calculator

Calculating 2-Month Returns When Rolling Out And Up

Options calculations will give us an accurate assessment of our covered call writing profits. It’s more meaningful to use percentages rather than dollar amounts when executing these calculations. For example, a $1000.00 profit on a $10,000 investment (10%) is much more significant than a $1000 return on a $100,000 investment (1%). That’s why percentages forms […]

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covered call writing and option value

Am I Losing Money When Option Value Increases After Entering A Covered Call Position?

The risk in covered call writing is in the stock purchased not in the option sold. Sound familiar? It’s in all my books and DVD Programs and mentioned in my seminars and webinars. Yet it appears when we look at our brokerage statements that this concept is not true. That is because we see a […]

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Closing A Covered Call Writing Position Mid-Contract: A Real Life Example

The use of exit strategies will elevate our profits to the highest possible levels. Mastering the skill of position management is one of the main reasons why Blue Collar Investors outperform other covered call writers. A favorite exit strategy of mine is the mid-contract unwind exit strategy used in the first half of an options […]

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