Sep 23, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
When we sell a covered call and share price rises dramatically, there is a tendency to roll up in order to capture additional future share appreciation. The most common reason for a gap-up in price is a favorable earnings report. In mid-May 2017 Tim wrote me about a...
Sep 9, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations
When we write a covered call, there is a trader or market-maker buying that call on the other side of the trade. We know that as expiration approaches, the time value of options tends to approach zero (Theta effect). With that in mind I received an email from Marcos...
Aug 5, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Covered call writing exit strategies include scenarios when share price moves up or down. Our main enemy is share depreciation where we need to mitigate losses but we must also have the ability to enhance returns when share price rises under certain specific...
Jul 29, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Stock Option Strategies, Technical Analysis
Covered call writing generates monthly (or weekly) cash flow but it also reduces our cost basis. The latter result is the reason why covered call writing increases our chances of a successful trade more so than simply owning the stock. Historical data tells us that in...
Jul 15, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Put-selling
Selling options (covered call writing and selling cash-secured puts) will result in a positive outcome in the first four of the following five scenarios: Stock price moves up significantly Stock price moves up slightly Stock price remains the same Stock price moves...
Jun 24, 2017 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
The mid-contract unwind (MCU) exit strategy is a position management maneuver we use to generate a second income stream in the same month with the same cash investment. The opportunity arises when share price moves significantly higher than the short call strike in...
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