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Covered call writing with leveraged ETFs

Covered Call Writing, Leveraged ETFs, Weekly Options and Protective Puts

Traditional covered call writing consists of buying a stock or exchange-traded fund (ETF) and selling a call option to generate cash flow. Frequently BCI members will think outside the box and add additional strategies and products to create a covered call writing-like strategy. The goal in these cases is not to complicate a realtively straightforward […]

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Selling deep out-of-the-money covered call options

Selling Deep Out Of The Money Covered Call Options

Strike price selection is a critical concept needed to master covered call writing. Selling in-the-money strikes is the most conservative approach to this strategy and selling out-of-the-money strikes is the most bullish. We use the latter when the overall market is bullish and chart technicals are bullish and confirming. Once we have decided that a […]

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P&L graph showing the importance of exit strategies when covered call writing

Profit And Loss Graphs For Covered Call Writing

Covered call writing, like most investment strategies, has a certain risk/reward profile relating to potential profits and losses. A profit and loss graph  is a  graphical representation of the potential outcomes of this or other strategies. Let’s first have a look at a generic P&L graph: Components of a P&L graph Vertical axis represents the […]

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In-the-money strikes and early exercise

When And Why Will My In-The-Money Strike Be Exercised?

Covered call writers receive option premiums for undertaking the obligation to sell our shares to the option holder if that holder decides to exercise that right. Understanding when and why exercise will take place is critical to the implementation of appropriate exit strategies and therefore maximizing our option and stock profits. Let’s first look at […]

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Covered call trades: the brokerage statement

Executing A Covered Call Trade: A Step By Step Look At Our Broker Statement

Executing a covered call trade and understanding the accounting procedures on our online discount broker statements can be confusing to the new option trader. I have recently received a few emails regarding this topic so I thought it would be useful to show an actual trade I made with KORS, a stock on our Premium […]

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Calculating covered call writing returns

Analyzing The Time Value Of In-The-Money Strikes

Maximizing covered call writing profits requires us to master strike price selection. Very few covered call writers outside the BCI community use in-the-money strikes and, as a result, do not achieve the results that we do. Recently, a few BCI members sent me emails commenting how in-the-money strikes do not generate profits that meet their […]

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Covered call writing and special cash dividends

Special 1- Time Cash Dividends and Our Covered Call Positions

Every so often we will see a company declare a “special dividend” which is separate from the typical recurring dividend cycle, if there is one. It is frequently a reflection of exceptionally strong earnings and/or a company with a large cash balance. It is a positive sign regarding the financial health of this corporation. Some […]

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Covered call writing using the Blue collar Investor methodology

Examining A Covered Call Trade

Mastering covered call writing requires us to learn from our mistakes and not repeating them. We can then utilize a series of guidelines and rules that will guide us to the highest possible returns with the least amount of risk. Maximizing profits with capital preservation in mind is what the BCI methodology is all about. […]

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exit strategies for covered call writing

Should I Roll My Option When The Stock Price Is DEEP In-The-Money?

Exit strategy execution is a critical skill every covered call writer should master. In addition to managing positions where share price has decreased there are also situations where we can benefit when price has dramatically accelerated. Let’s look at a trade recently executed by one of our Premium Members: Our member generated a nice 1-month […]

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Using LEAPS to increase dividend yield

Using LEAPS Covered Calls to Increase Dividend Yield

Innovative covered call writers can develop ideas of implementing a strategy in unconventional ways. For example, we can invest in a money market or CD and perhaps not even beat the inflation rate with those dividends. We can buy a quality bond and wait six months to receive our first (ho-hum) return. Covered call writers can […]

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