When entering our covered call trades with new positions, we buy the stock and immediately sell the option. This can be accomplished by legging-in or using a buy-write combination form. This is an important guideline because we will be assured of capturing our initial time value return goals. On August 6th, 2018, Joanna shared with […]
Managing News-Driven Gap-Downs: A Real-Life Example with Stamp.Com
Earnings reports represent the greatest risk for price gap-downs for our covered call writing and put-selling stocks. Problem solved…we avoid earnings reports. However, from time-to-time unexpected negative news will be reported that will cause significant price decline. On July 25th, 2018, Earl shared with me a trade he initiated with Stamps.com (NASDAQ: STMP) and was […]
Converting Non-Dividend Stocks Into Dividend Stocks
Generating a consistent cash flow from stock dividends is an appealing benefit from owning shares for many investors. Stock ownership, in these scenarios, can create two income streams, one from price appreciation and the other from quarterly dividends. However, not all securities have associated dividends and some investors will bypass these stocks even if they […]
Why Covered Call Writing Outperforms the Overall Market
Why should we spend the time to educate ourselves on how to implement and manage covered call writing trades? The answer is simple: Once the 3 required skills (stock selection, option selection and position management) are mastered, we will put ourselves in a position to beat the market on a consistent basis. This article will […]
“Hitting a Double” Calculations with The Ellman Calculator
One of the BCI exit strategies that helps distinguish us from all other covered call writers is known as “hitting a double” We use this position management technique when share value declines such that option value drops to 20% (in the first half of a monthly contract) or 10% (in the second half of a […]
Managing Earnings Reports on Long-Term Holdings
Never sell a covered call or put option when there is an earnings report due to be reported prior to contract expiration. I have repeated this rule so many times over the years because I want our members to avoid the losses I incurred back in the 1990s before I realized how important it was […]
What Covered Call Writing Has Meant To Me: A Financial Advisor’s Perspective by Guest Author Kevin Crowe
In June 2018 I had the pleasure of having dinner with Kevin, a long-time BCI member and retired financial advisor. His story reminded me of how option-selling not only impacts the investor but also so many of those close to us. In Kevin’s case, it touched members of his family and a large database of […]
Protective Puts and the Collar Strategy: Selecting the Best Strike Prices/ Last Chance for Holiday Orders
Covered call writing, when combined with protective puts, is known as the collar strategy. The maximum gain is established by the short call strike while the maximum loss is defined by the long put strike. For example, if a stock is purchased for $48.00 per share and the $50.00 call is sold while the $45.00 […]
“Hitting a Double” Using a Lower Strike Price
One of the exit strategies for covered call writing that allows us to enhance portfolio returns is known in the BCI community as “hitting a double”. We implement this position management technique when option value meets our 20%/10% guidelines. The initial short call is closed (buy-to-close) as share value declines early to mid-contract and then […]
Multi-Leg Option Trades: Understanding Calculations and Results
Covered call writing involves a minimum of 2 legs: we are long the stock (own the stock) and short the option (sold the option). There are many times when we employ the position management skill and options are bought back and new options sold or our underlyings are sold. This adds additional legs to the […]
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Using The Ellman Calculator to Monitor “Hitting a Double” Results
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Analyzing a Rolling Down Trade During an Extreme Short-Term Market Decline
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Ask Alan #157 – How to Set Up a Poor Man’s Covered Call Trade
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When Should We Execute Our Option-Selling Trades?
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Should We Add a Short Put to Our Collar Trades?
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The New Stock Market- Algorithmic and High Speed Trading
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Options That Expire Weekly and Conventional Expiration Cycles
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Why the 3% Guideline Applies to Puts but Not to Call Options
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Earnings Pre-Announcements Explained and Categorized
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Tax Implications of Writing Covered Calls against Long-Term Holdings
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Alan Ellman Sunny, We use the stocks in the white cells. Th
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Sunny Alan, When you choose new candidates for option
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Barry B Premium Members, This week’s Weekly Stock Scr
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- Using The Ellman Calculator to Monitor "Hitting a Double" Results | The Blue Collar Investor […] Complete Encyclopedia for Covered Call W
