20%/10% Guidelines: “Hitting a Double” in the Same Day: A Real-Life Example with Consumer Staples Select Sector SPDR (NYSE: XLP)

20%/10% Guidelines: “Hitting a Double” in the Same Day: A Real-Life Example with Consumer Staples Select Sector SPDR (NYSE: XLP)

Nov 12, 2022 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Trade Execution, Stock Option Strategies

After entering our covered call writing trades, we immediately enter our 20%/10% BTC (buy-to-close), GTC (good-until-cancelled) limit orders. If and when these thresholds are reached (resulting from share price decline) are short calls will be closed (bought back). At...
Why Did Option Value Decline After Stock Price Accelerated? A Real-Life Example with United Health Group Inc. (NYSE: UNH)

Why Did Option Value Decline After Stock Price Accelerated? A Real-Life Example with United Health Group Inc. (NYSE: UNH)

Nov 4, 2022 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

We, as covered call writers and sellers of cash-secured puts, are on the sell-side of options. Every so often, I receive interesting emails with educational value from members who buy options. On 4/21/2022, Kevin shared with a trade he executed with UNH where share...
Evaluating Pre- and Post-Market Opening Calculations; A Real-Life Example with The Simply Good Foods Company: (Nasdaq: SMPL)

Evaluating Pre- and Post-Market Opening Calculations; A Real-Life Example with The Simply Good Foods Company: (Nasdaq: SMPL)

Oct 29, 2022 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

Preparing for our initial covered call writing and cash-secured put trades starts pre-market. After developing a watchlist of eligible securities, we turn to the option-chains to determine if initial time-value returns align with our stated goals. Market-makers will...
Setting Our 20%/10% Guidelines After Rolling an Option Out or Out-And-Up

Setting Our 20%/10% Guidelines After Rolling an Option Out or Out-And-Up

Oct 15, 2022 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

Rolling-out is a covered call writing exit strategy we frequently use when a strike is expiring in-the-money (ITM) and we want to retain the underlying shares for the next contract cycle. After closing the short call in the current month prior to rolling, a new trade...
Portfolio Overwriting in High Implied Volatility (IV) Markets + Alan’s Wealth365 Webinar Registration Link

Portfolio Overwriting in High Implied Volatility (IV) Markets + Alan’s Wealth365 Webinar Registration Link

Oct 8, 2022 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies

One of our covered call writing-like strategies is portfolio overwriting. The strategy involves selecting deep out-of-the-money (OTM) strikes that will generate lower returns than traditional covered call writing but also decreases the likelihood of exercise (our...