Aug 10, 2024 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
click ↑ 4 Featured When selling covered calls or cash-secured puts, we must be appropriately diversified, as well as allocating a similar amount of cash per position. This will protect our portfolios from significant price decline in 1 or 2 of our positions. When we...
Aug 3, 2024 | Fundamental Analysis, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
click ↑ 4 Featured When we write covered calls, our expectation is that if the strike expires in-the-money (ITM), even by $0.01, our shares will be sold at the strike price as a result of option exercise. We check our brokerage accounts the Saturday after expiration...
Jul 20, 2024 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
click ↑ 4 Featured Portfolio overwriting is a covered call writing-like strategy seeking to both generate cash flow and retain the underlying shares. Share retention may be motivated by our bullish long-term assessment of the security and/or concern for negative...
Jul 13, 2024 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
click ↑ 4 Featured Covered call writers will frequently find themselves in a position where the short call is expiring in-the-money (ITM), while still wanting to use the same underlying shares for the next contract cycle. How should this be managed? 3-approaches...
Jul 6, 2024 | Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
click ↑ 4 Featured When our covered call writing trades move deep in-the-money (ITM), the time-value cost-to-close approaches (but does not reach) $0.00. In these scenarios, it may make sense to close both legs of the trade (mid-contract unwind or MCU exit strategy)....
Jun 22, 2024 | Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
click ↑ 4 Featured Covered call writing trades have 2 components: we are long the stock and short the option. When evaluating the success or lack thereof for our trades, we must factor in both legs of the trade. In this article, we will analyze an example of how we...
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