beginners corner
Archive | Option Trading Basics RSS feed for this section

Collar Calculations Using the BCI Trade Management Calculator

The Collar Strategy is a covered call writing-like strategy where a protective put is added to the trade, thereby establishing a floor and a ceiling with a maximum gain and […]

7 Comments Continue Reading →

When Should I Take My Profits with a Successful Covered Call Writing Trade?

Which %, if any, of our original covered call writing initial time-value return, should we use to close both legs of the trade, and guarantee a realized return? 60%? 75%? […]

11 Comments Continue Reading →

Using Technical Analysis for Our Stock & Option Selection in Covered Call Writing Trades

In our BCI methodology, we have a 3-pronged approach to stock selection for our covered call writing trades: Fundamental analysis Technical analysis Common-sense principles (minimum trading volume, avoiding earnings reports, […]

12 Comments Continue Reading →

How Our Covered Call Trades are Impacted When Regular and Special 1-Time Cash Dividends Come on the Same Day

The parameters of our covered call trades are often changed when certain corporate events result in option contract adjustments. These events include stock splits, mergers & acquisitions as well as […]

9 Comments Continue Reading →

Comparing Covered Call Writing & Cash-Secured Puts in Bull Market Environments

Covered call writing versus cash-secured puts in bull markets … which is better? This article will present the arguments for both and make a case why I prefer covered call […]

8 Comments Continue Reading →

Selecting the Best LEAPS Strike for an AAPL Poor Man’s Covered Call Trade

The Poor Man’s Covered Call (PMCC) is a covered call writing-like strategy where deep in-the-money (ITM) LEAPS options replace the long stock positions. LEAPS have expirations of greater than 1 […]

16 Comments Continue Reading →

What is the Single Best Delta to Use When Selecting My Covered Call Writing Strikes? Answer: None

This is one of the most frequently asked questions I receive from covered call writers all over the world. Should I use a 40-Delta? 35-Delta? Higher? Lower? The focus is […]

4 Comments Continue Reading →

The Collar Strategy: 2 BCI Spreadsheets: A Real-Life Example with Crocs, Inc. (Nasdaq: CROX)

The collar strategy is a covered call writing-like strategy where a protective put is added to the covered call trade, creating a 3-leg trade. BCI has developed 2 calculators that […]

18 Comments Continue Reading →

How to Create 3-Income Producing Portfolios Using Covered Call Writing and Dividend Generating Stocks

Covered call writing is a low-risk cash-flow strategy that can also create the potential of a 2nd income stream when using out-of-the-money (OTM) strikes which can also produce potential income […]

8 Comments Continue Reading →

Selling Cash-Secured Puts: Part II

In our last blog publication, 2 put applications were discussed: traditional put-selling and the PCP (wheel) Strategy. In this week’s article, 3 more approaches will be reviewed. Selling cash-secured puts: […]

11 Comments Continue Reading →