The PCP Strategy, called the “wheel strategy” outside the BCI community, involves selling cash-secured puts and covered calls. One of the ultra low-risk strategies developed by the BCI team involves selling weekly cash-secured puts with Deltas of 10 (-0.10) or less with an annualized return goal range of 10% to 20%. This article will highlight […]
Converting High Volatility ETFs to Conservative Cash-Generating Positions: A Real-Life Example with Global X Lithium & Battery Tech ETF (NYSE: LIT)
The covered call writing and put-selling premiums we receive are directly related to the implied volatility (IV) of the underlying securities. This is true of both stocks and exchange-traded funds (ETFs). How do we manage elite-performing securities that generate extremely high returns for near-the-money strikes? In other words, can we use these securities and mitigate […]
Analyzing a Rolling-Up Covered Call Writing Trade: A Real-Life Example with Sinclair Broadcast Group, Inc. (NASDAQ: SBGI)
Covered call writing exit strategies include rolling-out and rolling-out-and-up but what about rolling-up in the same contract month? On January 4, 2021, Court shared with me a series of trades she executed with SBGI where a covered call trade was rolled-up as share price accelerated. This article will dissect all aspects of the trades and […]
Unusual Strike Prices and Contract Adjustments: A Real-Life Example with ARK Next Generation Internet ETF (NYSE: ARKW)
We enter a covered call writing trade for a particular strike and then that strike disappears. What happened? Is this a bad dream? Actually, this is a bit unusual but not an extremely rare occurrence. Contract adjustments are associated with corporate events like stock splits, mergers & acquisitions and special 1-time cash and stock dividends. […]
Understanding the Math of Unwinding Covered Call Writing Trades Early: A Real-Life Example with Invesco Solar ETF (NYSE: TAN)
On October 6, 2020, Alex from Mexico shared with me a covered call writing trade he executed with TAN. He was considering unwinding the trade using our mid-contract unwind exit strategy and wanted to know how I analyze these scenarios. This article will detail the calculations used in the Unwind Now tabs of the Elite […]
Selecting the Best ITM Strikes for Covered Call Writing: A Real-Life Example with Etsy, Inc. (Nasdaq: ETSY)
In challenging market environments, we favor in-the-money strikes for our covered call trades. The intrinsic-value component of our option premiums will provide additional downside protection and lower the breakeven price point (BE) below that of at-the-money and out-of-the-money strikes. But which ITM strike should we select? This article will explain the BCI approach to select […]
Dividends and After-Hour News Causing Exercise of OTM Call Strikes: A Real-Life Example with Financial Select Sector SPDR Fund (NYSE: XLF)
On December 21, 2020, Donna shared with me a successful trade she executed with XLF. What made this trade interesting was that the option was exercised after expiration when the strike closed out-of-the-money. This article will examine the reasons for this unusual circumstance. Donna’s trade 11/24/2020: Buy 300 x XLF at $28.59 11/24/2020: STO 3 […]
Using Delta to Create Low-Risk/ High-Return Put-Selling Trades: A Real-Life Example with ETSY, Inc. (NASDAQ: ETSY)
When selling cash-secured puts, our strikes are selected based on our initial time-value return goal range and personal risk-tolerance. In the BCI methodology, we use only out-of-the-money (OTM) cash-secured puts unless our objective is to purchase a stock at a discount and have those shares put to us sooner rather than later. There are times […]
Status of a Rolling-Down Trade with Williams-Sonoma, Inc. (NYSE: WSM)
Exit strategies for covered call writing is a critical element necessary to maximize our returns. In December 2020, Alan K shared with me a rolling-down trade he executed with WSM and was curious as to the total trade status. This article will highlight the series of trades from 11/23/2020 to 12/9/2020 for the December 2020 […]
Holding a Stock Through an Earnings Report: A Real-Life Example with Atlassian Corp. (Nasdaq: TEAM)
Covered call writers are frequently faced with scenarios when earnings reports are due out on securities where we have long-term bullish assumptions. In October 2019, Mark shares with me a dilemma he was facing with TEAM. The October 2019 monthly contracts expired on 10/18/2019 but there was an earnings release due on 10/17/2019. This article […]
Podcast
- 66. Comparing the Cost-To-Close Covered Call Trades with Time-Value Return Goals
- 65: The 20%/10% Guidelines for Covered call Writing and Selling Cash-Secured Puts
- 64. Creating Dividend Like Income for Non Dividend Stocks
- 63. Rolling Decisions on Expiration Friday
- 62. Should I Unwind My Covered Call Trade 1 Week Prior to Contract Expiration?
- 61. Realized Versus Unrealized Capital Gains (Losses) for Covered Call Writing
- 60. Combining ITM Call Strikes & Stock Dividends to Protect in Bear Markets
- 59. ANALYZING 2 Month and 4-Day Covered Call Trades
- 58. Is This Trade a Winner or a Loser?
- 57. Evaluation Stock Purchase Price and Breakeven When Rolling Options
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