Stock options have a myriad of applications. With our covered call writing and put-selling strategies, we seek to generate cash-flow in a low-risk manner. Another utilization of stock options is to mitigate losses when share price declines. This is known as the stock repair strategy. It is used when a stock is purchased ( with […]
The Poor Man’s Covered Call (PMCC): Explaining Upside Potential + Premium Membership News
When using the PMCC strategy, a covered call writing-like strategy, our goal is to generate cash flow with a lower cash investment than traditional covered call writing. The BCI PMCC Calculator shows initial time-value returns from this short call premium as well as the upside potential should share price accelerate. This article will analyze this […]
Selling Cash-Secured Puts to Simultaneously Generate Cash Flow and Buy a Stock at a Discount
Selling cash-secured puts is a low-risk option-selling strategy geared to generating cash flow and beating the market on a consistent basis. In certain scenarios an additional goal of buying the stock at a discount is added to traditional put-selling. This article will analyze such a dual-purpose trade proposed by Safi on April 23rd 2021. […]
Can Price Movement Be Explained by Profit-Taking?: A Real-Life Example with Global X Funds Infrastructure Dev. (PAVE)
On April 8,2021, Nathan shared with me his covered call writing trade with PAVE which was initiated 3 days earlier. This exchange-traded fund had a strong technical chart but the price started declining immediately after the trade was entered. Nathan commented that he read in a technical analysis book that when share price breaks out […]
Managing Implied Volatility Risk by Establishing an Initial Time-Value Return Goal Range + Webinar Login Link
When screening for eligible securities for covered call writing and selling cash-secured puts, we must establish how much risk we are willing to incur. There is no right or wrong here as the appropriate amount will vary from investor-to-investor. To determine security risk, we can look up implied volatility (IV) stats but that will simply […]
Rolling Covered Calls Out-And-Up Means Adding Cash to the Position
One of the covered call writing exit strategies in our arsenal as expiration approaches is rolling in-the-money strikes out-and-up. This involves buying back the near-month strike and selling a higher strike in the next contract period. Since there is an intrinsic-value component to the cost-to-close, we must add additional cash to the position in order […]
Using the Elite-Plus Calculator for “Hitting a Double” Results: A Real-Life Example with Redfin Corp. (NASDAQ: RDFN)
One of the covered call writing exit strategies available to us is hitting double. In March 2021, Duane shared with me a trade he executed using this strategy and inquired about how to enter this series of trades into the BCI Elite-Plus Calculator. What is hitting a double? This position management tool is implemented […]
Reversing Delta with the PCP Strategy: A Real-Life Example with Etsy, Inc. (Nasdaq: ETSY)
The PCP Strategy, called the “wheel strategy” outside the BCI community, involves selling cash-secured puts and covered calls. One of the ultra low-risk strategies developed by the BCI team involves selling weekly cash-secured puts with Deltas of 10 (-0.10) or less with an annualized return goal range of 10% to 20%. This article will highlight […]
Converting High Volatility ETFs to Conservative Cash-Generating Positions: A Real-Life Example with Global X Lithium & Battery Tech ETF (NYSE: LIT)
The covered call writing and put-selling premiums we receive are directly related to the implied volatility (IV) of the underlying securities. This is true of both stocks and exchange-traded funds (ETFs). How do we manage elite-performing securities that generate extremely high returns for near-the-money strikes? In other words, can we use these securities and mitigate […]
Analyzing a Rolling-Up Covered Call Writing Trade: A Real-Life Example with Sinclair Broadcast Group, Inc. (NASDAQ: SBGI)
Covered call writing exit strategies include rolling-out and rolling-out-and-up but what about rolling-up in the same contract month? On January 4, 2021, Court shared with me a series of trades she executed with SBGI where a covered call trade was rolled-up as share price accelerated. This article will dissect all aspects of the trades and […]
Podcast
- 66. Comparing the Cost-To-Close Covered Call Trades with Time-Value Return Goals
- 65: The 20%/10% Guidelines for Covered call Writing and Selling Cash-Secured Puts
- 64. Creating Dividend Like Income for Non Dividend Stocks
- 63. Rolling Decisions on Expiration Friday
- 62. Should I Unwind My Covered Call Trade 1 Week Prior to Contract Expiration?
- 61. Realized Versus Unrealized Capital Gains (Losses) for Covered Call Writing
- 60. Combining ITM Call Strikes & Stock Dividends to Protect in Bear Markets
- 59. ANALYZING 2 Month and 4-Day Covered Call Trades
- 58. Is This Trade a Winner or a Loser?
- 57. Evaluation Stock Purchase Price and Breakeven When Rolling Options
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