## Penny Pilot Program

Do you get frustrated when something doesn’t make sense? Me too. Here’s an example: You’re viewing an options chain of a great-performing stock in a great-performing industry and you note that the premiums are trading in \$.05 increments. This is important information to have when playing the bid-ask spread. Then you check the same options […]

## Options That Expire Weekly and Conventional Expiration Cycles

There’s a new man in town! A relatively new options product is now available called the Weekly Options Series or Weeklys. These weekly expiration options are listed on a Thursday and expire the following Friday. The exception is that weeklys are not traded the week of expiration Friday and therefore do not list new weeklys on […]

So you sold an options contract for \$380 and generated a 3.5% 1-month return. Did you ever wonder how the market determined the value of that contract to be \$380? The simple equation that most of us know and understand is the following:  Option premium = Intrinsic Value + Time Value To review, let me […]

## Theta-Time Decay of our Option Premiums

Educated covered call writers know that it is critical to sell our options early in the 1-month cycle. I always try to sell my options in the first week of a 4-week expiration cycle and no later than the beginning of the second week of a 5-week cycle. The reason has to do with the […]

## Non-Standard Options- What they are and why we should avoid them

You do your due-diligence and select a great performing stock in a great performing industry. Once you have determined that this equity meets all of our system requirements, you head off to the option chains to check the calculations. Since the stock is trading @ \$39 per share you check the \$40 call. This can’t […]

## Derivatives- Stock Options and More

All center fielders are baseball players but not all baseball players are center fielders. In much the same way, stock options are derivatives but not all derivatives are stock options. A derivative is a financial instrument whose value is “derived” from the underlying asset. It is a contract between two or more parties and the value is determined […]

## The Basics of the Call Option plus a Current Real Life Example

Definitions: Implicit in the term covered call writing is the fact that we are selling call options. They are covered because we first own the underlying equities prior to selling the option. Since this is my first article of the new year and given the fact that we have so many new members of the […]