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Covered Call Writing Premiums: Intrinsic Value + Time Value

When studying option trading basics, a critical formula is: Option premium = intrinsic value + time value (or extrinsic value) This past week I hosted a seminar in New York and there were many inquiries regarding the difference between intrinsic and extrinsic value so I felt a blog article would be appropriate. There are three types […]

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Entering Our Covered Call Positions Mid-Contract

In the BCI methodology for covered call writing we use predominantly 1-month options. There are times, however, where we find cash in our accounts (mid-contract) that is inactive. This may be due to closing a position early either because the share price declined significantly or accelerated exponentially. Perhaps Grandma gave you a generous birthday present. […]

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Covered Call Writing and Stock Option Expiration Cycles

When studying option trading basics, we learn that options expire on the third Friday of the month. In the BCI methodology we sell mainly 1-month stock options. When we view an options chain we see several other expirations available. However, they are not the same for each security Everyone likes when things make sense. Understanding why […]

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Covered Call Writing: Types of Customer Orders

Executing covered call trades begins when we instruct our online discount brokers what we want them to do for us. When instructing our online discount broker as to the actions we want taken, we submit a customer order. These orders can take several different forms depending on our investment strategies and objectives. We can buy […]

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Covered Call Writing: Stock Options with Additional Expiration Months

When studying our option trading basics, we learn that most stock options have four expiration cycles. Some securities also have long-term options (LEAPS) as well as weekly and quarterly expirations. Some of our members have noticed that there are certain actively-traded securities that have additional expiration months in addition to the ones we are already […]

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Covered Call Writing Using The Blue Collar Methodology

Fundamental analysis, technical analysis, common sense principles and calculations are all critical considerations when selling stock options the Blue Collar way. Since this is my first article written on our newly enhanced web site (hope you like it!) I thought it appropriate to use a real-life example to review the basic tenets of our BCI […]

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Portfolio Management- Organized Lists To Improve Our Option Profits For Covered Call Writing

How to trade options: I am a big believer in setting yourself up for success. This is accomplished through education, motivation, commitment and organization. Investors reading this article and others are definitely seeking education, and are motivated and committed. However, without organization the process will become difficult and perhaps unmanageable. As we create a watch list […]

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Constructing Your Covered Call Portfolio During Earnings Season

From mid-January to mid-February many of our watch list stocks will be reporting earnings rendering these equities ineligible for covered call writing at least until after the report is announced. This does NOT mean that our money will stay on the sidelines for a month (unless market conditions dictate this action). Blue Collar Investors are great people […]

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Stock Splits and their Impact on our Option Contracts

Definition  A stock split is a change in the number of shares outstanding (in circulation). The number of shares is adjusted by the split ratio, e.g. 3 to 1. In this case, 100 shares splits to 300 shares, however the share price is cut in third. Thus, the cost and current value of the investment […]

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How to Read an Option Chain

So how much cash can we generate selling options on the stocks that have passed our fundamental and technical screens? The answer lies in the option chain. This is a list that quotes option prices for a given security. For each underlying security, the option chain lists the various strike prices, option premiums, expiration dates […]

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