Selling deep out-of-the-money cash-secured puts in bear markets will provide us with additional protection to the downside in return for lower, but still significant, option returns. This article will highlight the use of Delta and implied volatility to establish a framework for executing such trades with n 84% probability of success. What is Delta? […]
How to Calculate Dividends into Our Covered Call Writing Calculations
Covered call writing is a low-risk, cash generating option-selling strategy. Premium is generated by undertaking the contractual obligation to sell our shares at a price (strike price) and date (expiration date) that we, the option sellers, determine. Frequently, dividend distributions represent an additional potential source of income. This article will use a real-life example with […]
Estimating Our Breakeven Price Points When Establishing Our Poor Man’s Covered Call Trades: A Real-Life Example with Apple, Inc. (Nasdaq: AAPL)
When initiating our Poor Man’s Covered Call (PMCC) trades, we can estimate our breakeven (BE) price points. It gets more complicated as more layers are added to the trades over the months and, perhaps, years that the trade continues. This article will detail the formula used to generate this BE price point and use a […]
Analyzing a 3-Income Covered Call Writing Trade: A Real-Life Example with Ready Capital Corp. (NYSE: RC)
Covered call writing with out-of-the-money (OTM) strikes provides the opportunity for 2 incomes streams, 1 from option premium and the other from share appreciation from current market value up to the OTM strike. Many of our eligible securities also generate quarterly dividends and trades can be established with 3-income stream potential. Such a trade was […]
How to Enter and Archive Cash-Secured Put Trades Around an Earnings Report
In last week’s segment, I posted a series of cash-secured put trades with Etsy, Inc. (Nasdaq: ETSY). Some trades were executed before an earnings report and a few post-earnings. This article will detail how to accurately enter and archive all trades using the BCI Trade Management Calculator. Stage 1: Pre-earnings report (ER) trades 7/18/22: […]
Calculating Realized Option & Unrealized Stock Covered Call Returns at the End of a Contract Cycle
Accurately calculating our covered call writing returns at the end of each contract cycle can be uncomplicated in some situations and more challenging in others. If we buy a stock at $48.00 and sell the $50.00 call at $1.50 and we allow exercise of an ITM strike (shares sold at $50.00 for a $2.00 per-share […]
Rolling-Out Poor Man’s Covered Call Trades: A Real-Life Example with Alphabet Inc. (Nasdaq: GOOG)
When the Poor Man’s Covered Call (PMCC) strategy is employed, the short call is the active leg of the trade. If a strike is expiring in-the-money (ITM), we can roll the short call to a later expiration date. This article will detail 2 possible rolling trades with GOOG, 1 for rolling-out to the same strike […]
How to Use the Capital Adjustment Section of the Trade Management Calculator When Executing Multiple Exit Strategies in the Same Contract Cycle
Exit strategies for covered call writing and selling cash-secured parts are integral aspects of our trading system. It is critical to learn how to enter, calculate and archive these position management trades. This article will detail one example of this process using a real-life example with Etsy, Inc. (Nasdaq: ETSY) using 2 rolling-up put trades […]
How to Enter & Calculate Rolling-Out-And-Down Cash-Secured Put Trades: A Real-Life Example with Invesco QQQ Trust (Nasdaq: QQQ)
When selling out-of-the-money (OTM) cash-secured puts, we calculate our initial time-value returns with this formula: % return = Put premium/ (put strike – put premium) When incorporating exit strategies into our strategy, we must properly enter these adjustments into our spreadsheets such that the calculations will be accurate and properly archived. What is rolling-out […]
Rolling-Up Our Cash-Secured Put Trades: A Real-Life Example with Etsy, Inc. (Nasdaq: ETSY)
When we sell cash-secured puts, we are seeking to generate cash flow or to buy securities at a discount. It is generally written that the maximum return for these trades is the put premium. This article will demonstrate how multiple income streams can be achieved by implementing our exit strategy arsenal and, thereby, achieve higher […]
Podcast
- 99. Anatomy of a Reverse Stock Split
- 98. Analyzing LEAPS Options for the Poor Man's Covered Call
- 97. Managing Our Poor Man's Covered Call Trades When Share Price Drops Substantially
- 96. Protecting Our Covered Call Trades: Protective Puts and In-the-Money Strikes
- 95. Covered Call Writing to Generate Premium and Dividend Income
- 94. Covered Call Writing Net Debit Limit Orders
- 93. WHEN CALL STRIKES MOVE DEEP ITM EARLY IN A CONTRACT
- 92. Selling Deep OTM Cash-Secured Puts to Create High-Probability Returns
- 91. Portfolio Overwriting Analyzed
- 90. Entering a Collar Trade
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