Oct 24, 2020 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Covered call writing is a low-risk, cash-generating strategy. We can lower the risk to an even greater extent by purchasing protective puts and by writing in-the-money (ITM) call options. Now, buying protective puts (called the collar strategy when used in conjunction...
Oct 17, 2020 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
A typical Poor Man’s Covered Call (PMCC) trade involves buying a deep in-the-money call LEAPS option and selling short-term out-of-the-money call options which is protected by the long LEAPS position. In April 2020, Martin shared with me a PMCC trade he executed...
Oct 3, 2020 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Option calculations help guide us to an accurate assessment of our covered call writing profits. It’s more meaningful to use percentages rather than dollar amounts when executing these calculations. For example, a $1000.00 profit on a $10,000.00 investment (10%) is...
Sep 26, 2020 | Exit Strategies, Option Trading Basics, Options Calculations, Options Trade Execution, Put-selling, Stock Option Strategies
This is a follow-up cash-secured puts article to the one published last week where I detailed how I was selling deep OTM cash-secured puts on Apple Computer (AAPL) to generate weekly cash flow. I was using strikes with Deltas below -0.10%, approximating less than a...
Sep 19, 2020 | Investment Basics, Option Trading Basics, Options Calculations, Put-selling, Stock Option Strategies
Selling Cash-Secured Puts is a strategy similar to, but not precisely the same as, covered call writing. It is generally used to generate cash-flow as a standalone strategy but also can be implemented to buy a stock at a discount or used in conjunction with covered...
Sep 12, 2020 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Option Strategies
Exit strategies for covered call writing is the 3rd required skill that must be mastered to achieve the highest possible returns. In January 2020, a member shared with me a trade she executed with BlackRock, Inc. (NYSE: BLK). The stock was trading at a cost-basis of...
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