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“Hitting a Double” on the Last Day of a Contract

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. This creates 2 income streams in the […]

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Analyzing Market Assessment Based on Portfolio Setup

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 market assessment was at the time of his […]

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The Collar Strategy: Using Longer-Term Put Expirations

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 Ciena Corp. (NYSE: CIEN).   Collar trade information […]

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Covered Call Writing with TLT: Generating Premium and Dividend Income

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: TLT). This exchange-traded fund produces dividend income twelve times a year with […]

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Managing a Poor Man’s Covered Call Trade When Share Price Drops Below the LEAPS Strike

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 with PPL Corp. (NYSE: PPL) where share price declined below the LEAPS strike […]

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Selling Deep OTM Cash-Secured Puts with Exit Strategy Enhancements

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 10% of ending in-the-money. My goal was to generate 0.4% […]

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When Call Strikes Move Deep In-The-Money Early in the -Contract: A Real-Life Example with BLK

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 $500.00 when the February 21, 2020 deep out-of-the-money (OTM) […]

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Analyzing Buy/Write Net Debit Limit Orders

Covered call writing trades can be entered by legging-in (buy stock and then sell option) or as a buy/write trade (one net debit limit order). In the latter order, the option premium is deducted from the stock price and the broker is required to execute the trade and that price or better or the trade […]

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Creating a Portfolio of Weekly Cash-Secured Puts

Selling cash-secured puts is a strategy similar to, but not precisely the same, as covered call writing. In February 2020, Chevy wrote to me asking for an article or video addressing weekly cash-secured puts, a strategy he was using and looking to enhance.   The 3-required skills Whether we are selling calls or puts and […]

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Am I Losing Money When I Buy Back My Deep In-The-Money Strike?

Recognizing successful covered call writing trades is just as important as executing them. On January 17, 2020, Mark wrote to me about a covered call trade that he was analyzing with SolarEdge Technologies, Inc. (NASDAQ: SEDG). He was concerned that if he bought back a deep in-the-money call, he would suffer a significant loss. Mark’s […]

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