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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 […]

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BCI Collar Calculator

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 […]

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exit strategies for covered call writing

“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 […]

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technical analysis for covered call writing

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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strike price selection for covered call writing

Evaluating an Initial Covered Call Writing Portfolio

Setting up our covered call writing and put-selling portfolios requires common sense analysis once our watch lists have been established. Considerations include proper stock and industry diversification, appropriate cash allocation to each position and.  strike selection that will maximize our returns and reflect personal risk-tolerance and overall market assessment. In this article, I will dissect […]

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technical analysis for covered call writing

Price Charts Tell a Story and Provide Guidance in Formulating Our Investment Strategies

Technical analysis is one of the critical tools available to us in selecting the best stocks for our option-selling strategies. Price charts are much more than a sequence of dots and lines…they tell a story about a company which, with proper research, ultimately leads to a series of rules and guidelines that will assist in […]

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option liquidity and bid-ask spreads

After-Hours Bid – Ask Spreads Can Be Deceiving

One of the BCI guidelines for selling covered call and cash-secured put options is that we require a bid-ask spread of $0.30 or less and/or an open interest of 100 contracts or more. Typically, options with large open interest will also be associated with smaller spreads. This makes it easier to close short positions at […]

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covered call writing with blue chip stocks

Dow 30 Stocks and Covered Call Writing: Implementing the Premium Blue Chip Report

The risk inherent in covered call writing and put-selling is related to price decline in the underlying security. Investors with low-risk tolerance may turn to blue chip stocks which have proven track records of being reliable, cash-rich securities that frequently also generate dividends. This article will highlight how to utilize the monthly BCI Premium Blue […]

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covered call writing option

Increasing Capital Gains When Selling Stock: Another Use for Covered call Writing

Covered call writing is a low-risk option-selling strategy typically used to generate monthly cash flow. When we capture call premium into our brokerage accounts, we are lowering our cost basis thereby increasing the opportunities for successful trades. This strategy can also be crafted to increase our capital gains (or decrease capital losses) when we decide […]

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using stock options to repair stock price loss

Stock Repair Strategy: Using Stock Options to Reduce Losses When Stock Price Declines

Selling covered call and cash-secured put options are used to generate cash flow. Our knowledge of these options can also be applied to mitigating losses after a stock we own declines in value. This article highlights how options can be used to reduce losses in “stock only” portfolios. Although this article was scheduled to be […]

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