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Analyzing Buy/Write Net Debit Limit Orders

Covered call writing trades can be entered by legging-in (buy stock and then sell option) or as a buy/write trade (one net debit limit order). In the latter order, the option premium is deducted from the stock price and the broker is required to execute the trade and that price or better or the trade […]

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Creating a Portfolio of Weekly Cash-Secured Puts

Selling cash-secured puts is a strategy similar to, but not precisely the same, as covered call writing. In February 2020, Chevy wrote to me asking for an article or video addressing weekly cash-secured puts, a strategy he was using and looking to enhance.   The 3-required skills Whether we are selling calls or puts and […]

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Am I Losing Money When I Buy Back My Deep In-The-Money Strike?

Recognizing successful covered call writing trades is just as important as executing them. On January 17, 2020, Mark wrote to me about a covered call trade that he was analyzing with SolarEdge Technologies, Inc. (NASDAQ: SEDG). He was concerned that if he bought back a deep in-the-money call, he would suffer a significant loss. Mark’s […]

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Entering a Collar Trade: A Real-Life Example with iShares Silver Trust (NYSE: SLV) + New Product with Discount Coupon

The collar strategy is a covered call writing-like strategy where a protective put is added to the covered call trade. In this article, the initial structuring of a collar trade will be highlighted using SLV, an eligible exchange-traded fund in our Premium ETF Report in August 2020.   The 3-legs of a collar trade STOCK: […]

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What Do Covered Call Writing and Steroids Have in Common?

Most investors view covered call writing as a singular strategy where we buy a stock and then sell an option leveraging that security. In reality, educated option-sellers realize that one of the most remarkable advantages of using this strategy is that it can be crafted to achieve multiple goals and meet the trading style and […]

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Portfolio Overwriting with Apple Computer (NASDAQ: AAPL)

Portfolio overwriting is a covered call writing alternative strategy. Our goals include increasing our returns by a modest amount while still retaining ownership of the shares. Deep out-of-the-money strikes are sold with specific annualized returns in mind, let’s say 6% for purposes of this article. Apple Computer is a widely held stock by many of […]

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Analyzing and Calculating a Multi-Leg Rolling-Down Covered Call Trade

Exit strategies for covered call writing will frequently allow us to convert losing trades to profitable ones. To corroborate this concept, a real-life example with Nike Inc. (NYSE: NKE) will be detailed.   Initial trade structuring On 6/22/2020, 200 shares of NKE was purchased at $97.72 2 July 17, 2020 $99.00 calls were sold for […]

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Automating the 20%/10% Guidelines

Position management is the 3rd required skill for achieving the highest level of option-selling success. One of the most important of the BCI protocols for covered call writing are the 20%/10% guidelines which assists us is closing short calls when those opportunities are presented. This allows us to mitigate situations when share price declines. These […]

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How to Use Technical Analysis and Market Assessment for Strike Selection Guidance

Strike price selection is the second required skill for our covered call writing and put-selling portfolios. Stock (and ETF) selection and position management (exit strategies) are the other two. This article will highlight how we can use overall market assessment and price chart analysis to help guide us to the best strike price selections.   […]

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Market Volatility and Our Option-Selling Trades: Using the VIX to Achieve Higher Returns

Options trading basics teaches us that the VIX or CBOE Volatility Index reflects the market’s expectation of the upcoming 30-day volatility. It measures market risk and is also known as the investor fear gauge. With this in mind, option-sellers are faced with a dilemma. Increased market volatility will translate into higher option premiums because the […]

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