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Understanding the Math of Unwinding Covered Call Writing Trades Early: A Real-Life Example with Invesco Solar ETF (NYSE: TAN)

On October 6, 2020, Alex from Mexico shared with me a covered call writing trade he executed with TAN. He was considering unwinding the trade using our mid-contract unwind exit strategy and wanted to know how I analyze these scenarios. This article will detail the calculations used in the Unwind Now tabs of the Elite […]

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Selecting the Best ITM Strikes for Covered Call Writing: A Real-Life Example with Etsy, Inc. (Nasdaq: ETSY)

In challenging market environments, we favor in-the-money strikes for our covered call trades. The intrinsic-value component of our option premiums will provide additional downside protection and lower the breakeven price point (BE) below that of at-the-money and out-of-the-money strikes. But which ITM strike should we select? This article will explain the BCI approach to select […]

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Dividends and After-Hour News Causing Exercise of OTM Call Strikes: A Real-Life Example with Financial Select Sector SPDR Fund (NYSE: XLF)

On December 21, 2020, Donna shared with me a successful trade she executed with XLF. What made this trade interesting was that the option was exercised after expiration when the strike closed out-of-the-money. This article will examine the reasons for this unusual circumstance.  Donna’s trade 11/24/2020: Buy 300 x XLF at $28.59 11/24/2020: STO 3 […]

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Using Delta to Create Low-Risk/ High-Return Put-Selling Trades: A Real-Life Example with ETSY, Inc. (NASDAQ: ETSY)

When selling cash-secured puts, our strikes are selected based on our initial time-value return goal range and personal risk-tolerance. In the BCI methodology, we use only out-of-the-money (OTM) cash-secured puts unless our objective is to purchase a stock at a discount and have those shares put to us sooner rather than later. There are times […]

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Status of a Rolling-Down Trade with Williams-Sonoma, Inc. (NYSE: WSM)

Exit strategies for covered call writing is a critical element necessary to maximize our returns. In December 2020, Alan K shared with me a rolling-down trade he executed with WSM and was curious as to the total trade status. This article will highlight the series of trades from 11/23/2020 to 12/9/2020 for the December 2020 […]

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How to Set Up a Portfolio of Nasdaq and S&P 500 Stocks in a User-Friendly Approach

Covered call writers and sellers of cash-secured puts know the importance of portfolio diversification. If one security under-performs, the others can compensate. This article will demonstrate how to craft a portfolio of large-cap tech and blue-chip companies for our option-selling strategies.   Strategy goals  Portfolio mix of blue-chip and technology companies User-friendly system Broad diversification […]

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Holding a Stock Through an Earnings Report: A Real-Life Example with Atlassian Corp. (Nasdaq: TEAM)

Covered call writers are frequently faced with scenarios when earnings reports are due out on securities where we have long-term bullish assumptions. In October 2019, Mark shares with me a dilemma he was facing with TEAM. The October 2019 monthly contracts expired on 10/18/2019 but there was an earnings release due on 10/17/2019. This article […]

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Using the Nasdaq-100 Volatility Index (VOLQ) in Covered Call Writing Decisions: A Real-Life Example with Invesco QQQ Trust (Nasdaq: QQQ)

One of the most popular exchange-traded funds (ETFs) used as underlyings for covered call writing is Invesco QQQ Trust (Nasdaq: QQQ) which consists of 100 of the largest domestic and international non-financial companies listed on the Nasdaq exchange. It is the ETF I have used the most over the past 2 decades of option-selling. This […]

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How to Execute a Covered Call Trade with a Buy/Write Combination Form

Covered call trades can be entered by legging-in (2 separate trades) or via the buy/write combination form (1 net trade). When available, the latter is an effective, and perhaps cheaper, way to execute our covered call trades when the bid-ask spreads of our options are narrow. This article will explain how to use the combination […]

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When Our Covered Call Strike Moves $1000.00 In-The-Money

This really happened. From March to August 2020, many of the large cap technology stocks were on fire. Thor shared with me a covered call trade he executed with Amazon.com, Inc. (NASDAQ: AMZN) where the strike moved $1000.00 in-the-money (ITM) as share price headed to the moon. As you read this article, see if you […]

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