After entering our covered call writing trades, we immediately enter our 20% buy-to-close (BTC) limit orders. This will automate the process to close our short calls in the first half of a monthly contract should share price decline significantly. This article will highlight such an opportunity that occurred with Procter & Gamble Company (NYSE: PG) […]

“Hitting a Double” With The Procter & Gamble Co. (NYSE: PG) + 15% Holiday Discount
Posted on December 12, 2020 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

Even and Odd Stock Splits: Understanding Contract Adjustments
Posted on December 5, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions (see the thread on last week’s blog commentary regarding AAN), special dividends and stock splits. Stock splits fall into 3 categories: Even splits Odd splits Reverse splits: (1-for 5, as an example) This […]

Analyzing LEAPS for The Poor Man’s Covered Call + Free Webinar Registration Link
Posted on November 28, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
The Poor Man’s Covered Call (PMCC), also known as a long call diagonal debit spread, is where deep in-the-money (ITM) LEAPS options are used in place of the long stock position. As with all strategies, the PMCC has its advantages and disadvantages but the main reason this strategy appeals to retail investors is that the […]

“Hitting a Double” on the Last Day of a Contract
Posted on November 21, 2020 by Alan Ellman in Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Investing, Stock Option Strategies
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 […]

Analyzing Market Assessment Based on Portfolio Setup
Posted on November 14, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
In May 2020, Gaetan sent me his portfolio positions for the May 2020 contracts. His cash available was $33,000.00 and decided to diversify with 5 different stocks. I thought it would be a useful exercise to look at his positions and analyze what we believe his overall market assessment was at the time of his […]

The Collar Strategy: Using Longer-Term Put Expirations
Posted on November 7, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Put-selling, Stock Option Strategies
When we add a protective put to our covered call trades the strategy is known as a collar. To reduce the monthly cost of the long put, some investors will consider using longer-term put expirations This article will explore the pros and cons of this approach using Ciena Corp. (NYSE: CIEN). Collar trade information […]

Covered Call Writing with TLT: Generating Premium and Dividend Income
Posted on October 31, 2020 by Alan Ellman in Exchange-Traded Funds, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
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 […]

Protecting Our Covered Call Trades: Protective Puts Versus In-The-Money Strikes
Posted on October 24, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writing is a low-risk, cash-generating strategy. We can lower the risk to an even greater extent by purchasing protective puts and by writing in-the-money (ITM) call options. Now, buying protective puts (called the collar strategy when used in conjunction with covered call writing) costs money and will lower our returns. Using ITM calls […]

Managing a Poor Man’s Covered Call Trade When Share Price Drops Below the LEAPS Strike
Posted on October 17, 2020 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
A typical Poor Man’s Covered Call (PMCC) trade involves buying a deep in-the-money call LEAPS option and selling short-term out-of-the-money call options which is protected by the long LEAPS position. In April 2020, Martin shared with me a PMCC trade he executed with PPL Corp. (NYSE: PPL) where share price declined below the LEAPS strike […]

Anatomy of a Reverse Stock Split
Posted on October 10, 2020 by Alan Ellman in Fundamental Analysis, Investment Basics, Option Trading Basics, Stock Option Strategies
Option contracts can be standard or adjusted. Certain corporate events may change standard option contracts to adjusted contracts. These events include stock splits, mergers, acquisitions, special dividends, spin-offs and reverse splits. After these events, options are altered to reflect these changes and make buyers and sellers of options whole. This article will focus in on […]
Podcast
- 50. Exit strategies Must Be Timed Properly
- 49. Analyzing a Multi Leg Covered Call Rolling Down Series of Trades
- 48. Rolling Deep OTM Cash Secured Puts
- 47. Rolling Up in the Same Contract Month
- 46. Should Delta Be the Sole Criteria for Covered Call Writing Strike Selection
- 45. Implied Volatility and Expected price Movement During the Life of Option Contracts
- 44. Can We Use ITM Strikes to Create a No Risk Covered Call Strategy?
- 43. Converting a Covered Call Trade to a Collar Trade
- 42. Why Was My OTM Put Exercised?
- 41. Collar Trades When Call Strikes Move Deep In The Money
Subscribe To Our Free Newsletter
Categories
- Ask Alan (14)
- Covered Call Exit Strategies (157)
- Exchange-Traded Funds (44)
- Exit Strategies (140)
- Fundamental Analysis (32)
- Investment Basics (424)
- Just Alan (6)
- Option Trading Basics (435)
- Options Calculations (279)
- Options Trade Execution (101)
- paper trading (4)
- Podcasts (47)
- Put-selling (58)
- Stock Investing (106)
- Stock Option Strategies (400)
- Stock Trading & Taxes (18)
- Technical Analysis (40)
- Uncategorized (17)
Recent Posts
- BCI PODCAST 45 Implied Volatility and Expected price Movement During the Life of Option Contracts
- How to Select the Best Strike Prices for Collar Trades: Real-Life Example with Advanced Micro Devices, Inc. (NASDAQ: AMD)
- BCI PODCAST 44 Can We Use ITM Strikes to Create a No Risk Covered Call Strategy?
- Poor Man’s Covered Call: Selecting the Best LEAPS Strike
Premium Membership
Why Covered Call Options May Be Your Best Investing Strategy
Nasdaq Interviews Alan Ellman
© 2020 The Blue Collar Investor. All Rights Reserved.
Beginners Corner Enhanced & Updated
- Lesson 1: Beginner's Corner for Covered Call Writing: 2nd Edition
- Lesson 2: Beginner's Corner for Covered Call Writing- 2nd Edition: Option Basics
- Lesson 3: Beginner's Corner for Covered Call Writing- Stock Selection
- Lesson 4: Beginner's Corner for Covered Call Writing-2nd Edition
- Lesson 5: Beginner's Corner for Covered Call Writing
- Lesson 6: Beginner's Corner for Covered Call Writing
- Lesson 7: Beginner's Corner for Covered Call Writing: 2nd Edition
- Lesson 8: Beginner's Corner for Covered Call Writing
- Video 9: Premium Membership
Beginners Corner Selling-Puts
- Lesson 1: What Is Puts Selling?
- Lesson 2: Puts-Selling Option Basics
- Lesson 3:puts-selling-technical analysis
- Lesson 4:puts-selling-Common Sense Considerations
- Lesson 5:puts-selling-Calculating Returns
- Lesson 6:puts-selling-Executing Put-Selling
- Lesson 7:puts-selling- Exit Strategies
- Lesson 8:puts-selling-Mastering Put-Selling
Recent Comments