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Application of the 20%/10% Guidelines Within a Broad Range of Implied Volatility Securities

I recently published an article titled Managing Implied Volatility Risk by Establishing an Initial Time-Value Return Goal Range. This article served as a catalyst for several inquiries from our members asking if the BCI 20%/10% guidelines applied to high volatility securities in terms of the protection we receive from declining share values. This article will […]

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Managing Implied Volatility Risk by Establishing an Initial Time-Value Return Goal Range + Webinar Login Link

When screening for eligible securities for covered call writing and selling cash-secured puts, we must establish how much risk we are willing to incur. There is no right or wrong here as the appropriate amount will vary from investor-to-investor. To determine security risk, we can look up implied volatility (IV) stats but that will simply […]

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Rolling Covered Calls Out-And-Up Means Adding Cash to the Position

One of the covered call writing exit strategies in our arsenal as expiration approaches is rolling in-the-money strikes out-and-up. This involves buying back the near-month strike and selling a higher strike in the next contract period. Since there is an intrinsic-value component to the cost-to-close, we must add additional cash to the position in order […]

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Using the Elite-Plus Calculator for “Hitting a Double” Results: A Real-Life Example with Redfin Corp. (NASDAQ: RDFN)

One of the covered call writing exit strategies available to us is hitting double. In March 2021, Duane shared with me a trade he executed using this strategy and inquired about how to enter this series of trades into the BCI Elite-Plus Calculator.   What is hitting a double? This position management tool is implemented […]

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Understanding Brokerage Statements for Covered Call Writing: A Real-Life Example with Energy Select Sector SPDR ETF (NYSE: XLE)

Our covered call writing and put-selling broker statements can be confusing when starting our option-selling careers. This article will detail the first 3 steps of our covered call trades (stock purchase, option sale and buy-to-close limit order) using XLE as reflected in one of my broker accounts.   Purchase of shares to initiate a covered […]

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Reversing Delta with the PCP Strategy: A Real-Life Example with Etsy, Inc. (Nasdaq: ETSY)

The PCP Strategy, called the “wheel strategy” outside the BCI community, involves selling cash-secured puts and covered calls. One of the ultra low-risk strategies developed by the BCI team involves selling weekly cash-secured puts with Deltas of 10 (-0.10) or less with an annualized return goal range of 10% to 20%. This article will highlight […]

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Converting High Volatility ETFs to Conservative Cash-Generating Positions: A Real-Life Example with Global X Lithium & Battery Tech ETF (NYSE: LIT)

The covered call writing and put-selling premiums we receive are directly related to the implied volatility (IV) of the underlying securities. This is true of both stocks and exchange-traded funds (ETFs). How do we manage elite-performing securities that generate extremely high returns for near-the-money strikes? In other words, can we use these securities and mitigate […]

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Analyzing a Rolling-Up Covered Call Writing Trade: A Real-Life Example with Sinclair Broadcast Group, Inc. (NASDAQ: SBGI)

Covered call writing exit strategies include rolling-out and rolling-out-and-up but what about rolling-up in the same contract month? On January 4, 2021, Court shared with me a series of trades she executed with SBGI where a covered call trade was rolled-up as share price accelerated. This article will dissect all aspects of the trades and […]

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Unusual Strike Prices and Contract Adjustments: A Real-Life Example with ARK Next Generation Internet ETF (NYSE: ARKW)

We enter a covered call writing trade for a particular strike and then that strike disappears. What happened? Is this a bad dream? Actually, this is a bit unusual but not an extremely rare occurrence. Contract adjustments are associated with corporate events like stock splits, mergers & acquisitions and special 1-time cash and stock dividends. […]

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Understanding the Math of Unwinding Covered Call Writing Trades Early: A Real-Life Example with Invesco Solar ETF (NYSE: TAN)

On October 6, 2020, Alex from Mexico shared with me a covered call writing trade he executed with TAN. He was considering unwinding the trade using our mid-contract unwind exit strategy and wanted to know how I analyze these scenarios. This article will detail the calculations used in the Unwind Now tabs of the Elite […]

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