Nov 7, 2020 | 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...
Oct 31, 2020 | 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:...
Oct 24, 2020 | 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...
Oct 17, 2020 | 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...
Oct 10, 2020 | 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...
Oct 3, 2020 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Option calculations help guide us to an accurate assessment of our covered call writing profits. It’s more meaningful to use percentages rather than dollar amounts when executing these calculations. For example, a $1000.00 profit on a $10,000.00 investment (10%) is...
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