Dec 5, 2020 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions (see the thread on last week’s blog commentary regarding AAN), special dividends and stock splits. Stock splits fall...
Nov 28, 2020 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
The Poor Man’s Covered Call (PMCC), also known as a long call diagonal debit spread, is where deep in-the-money (ITM) LEAPS options are used in place of the long stock position. As with all strategies, the PMCC has its advantages and disadvantages but the main...
Nov 21, 2020 | Covered Call Exit Strategies, Exchange-Traded Funds, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Investing, Stock Option Strategies
Exit strategies for covered call writing are critical components to our overall success. One of the strategies available to us is hitting a double. This is where we buy back the short call and wait for the stock price to recover allowing us to re-sell the same option....
Nov 14, 2020 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
In May 2020, Gaetan sent me his portfolio positions for the May 2020 contracts. His cash available was $33,000.00 and decided to diversify with 5 different stocks. I thought it would be a useful exercise to look at his positions and analyze what we believe his overall...
Nov 7, 2020 | Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Put-selling, Stock Option Strategies
When we add a protective put to our covered call trades the strategy is known as a collar. To reduce the monthly cost of the long put, some investors will consider using longer-term put expirations This article will explore the pros and cons of this approach using...
Oct 31, 2020 | Exchange-Traded Funds, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
The main goal of covered call writing is to generate option premium cash flow. Many investors also seek to develop dividend income in addition to the option premium revenue. One security that presents a unique scenario is iShares 20+ Year Treasury Bond ETF (NASDAQ:...
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