Application of the 20%/10% Guidelines for ITM & OTM Strikes + Registration Form for Thursday’s Webinar

Application of the 20%/10% Guidelines for ITM & OTM Strikes + Registration Form for Thursday’s Webinar

May 5, 2023 | Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

One of the key methods to partially automate our covered call writing exit strategy arsenal is to place buy-to-close (BTC), good until cancelled (GTC) limit orders to close our short calls based on our BCI 20%/10% guidelines. We instruct our broker to buy back the...
Analyzing a Defensive Turned Aggressive Covered Call Trade: A Real-Life Example with Select Sector SPDR Utilities (NYSE: XLU)

Analyzing a Defensive Turned Aggressive Covered Call Trade: A Real-Life Example with Select Sector SPDR Utilities (NYSE: XLU)

Apr 29, 2023 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

When we craft our covered call trades, we must decide if a defensive (in-the-money or ITM calls) or aggressive (out-of-the-money or OTM) position should be established. We base this on overall market assessment, chart technical pattern and personal risk-tolerance. We...
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...