Oct 22, 2016 | Exchange-Traded Funds, Investment Basics, Option Trading Basics, Stock Option Strategies
Covered call writing results can be enhanced through the use of leveraged ETFs and margin accounts. However, so too is the risk elevated. In this article, the pros and cons of these strategies are examined. Definitions Leveraged ETF: An exchange-traded fund...
Oct 15, 2016 | Exchange-Traded Funds, Investment Basics, Option Trading Basics, Stock Option Strategies
Never write a covered call or sell a cash-secured put when there is an upcoming earnings report prior to contract expiration. This is one of the most important rules in the BCI methodology. Adhering to this guideline can create challenges during the heart of earnings...
Oct 8, 2016 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Trade Execution
We write a covered call or sell a cash-secured put. At expiration, the strike price is in-the-money. For calls that means lower then current market value and for puts it means higher than current market value. To demonstrate the moneyness of these strikes, let’s...
Oct 1, 2016 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Stock Option Strategies
Covered call writing involves first buying a stock or exchange-traded fund (ETF) and then selling call options on those shares. Each contract we sell requires us to buy 100 shares of the underlying. This can be a challenge for some investors who may look for stock...
Sep 24, 2016 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Since we are selling call and put options we know there are traders or market makers who are buying them. In this article we will explore why only about 10% of all call options are actually exercised by the option holders even when the holders want to own the...
Sep 17, 2016 | Fundamental Analysis, Investment Basics, Option Trading Basics, Options Calculations, Put-selling, Stock Option Strategies
Covered call writing and selling cash-secured puts are low-risk option-selling strategies used to generate monthly cash flow. Low-risk does not mean no risk so how can we measure the degree of risk we are undertaking? Let’s first all agree that any strategy that...
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