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 […]
Covered Call Writing: Setting Up A Stop Loss Order
Successful covered call writing requires the appropriate use of exit strategies to mitigate losses and enhance gains. In today’s article, we will focus on actions that can be taken when a stock price declines and capital preservation becomes a concern. Once we enter our covered call position we are in two distinct trades. We are long […]
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 […]
Option Approval Levels For Our Brokerage Accounts
Covered call writing along with all other stock and option strategies require us to open a brokerage account. This process will take more than a simple phone call. All brokerages will require us to fill out an options approval form as designed by its compliance department. Based on the information gleaned from this form, the […]
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 […]
Covered Call Writing In India
I recently learned that covered call writing comes in all shapes and sizes. Although we are honored to have a significant number of international members, most trade US stocks on US exchanges with the rules we are familiar with. But what if the rules were different? Let’s look at baseball for a minute. What if […]
Setting Up Your Covered Call Portfolio Using The Ellman Calculator
Covered call writing involves options calculations…there’s no getting around it! It’s been a while since we talked math. What’s with all the frowns? Mastering and understanding the calculations (The Ellman Calculator will do all the work) will enhance our bottom lines…more cash in our pockets. With that in mind, let’s set up a hypothetical portfolio of […]
Why Some In-The-Money Strikes Are NOT Exercised; A Real Life Example
When studying the basics of option investing we learn that the option holder of an in-the-money strike has a certain amount of intrinsic value which appears to be profit that would never be bypassed. For example, if we (as covered call writers) sold a $50 call and the stock was trading @ $52 @ 4PM […]
Executing Covered Call Trades: The Buy-Write Combination Form.
There are two ways to enter a covered call position. The first is called legging-in where the stock is purchased and then the option is sold. Two distinct trades are executed. The second is known as a buy-write order where the security purchase and option sale is entered as one trade with a net debit […]
How Our Trade Orders Are Executed For Covered Call Writing
Executing our stock and call option trades is fast and efficient. But what actually goes on behind the scenes after we enter market or limit orders? Once we type our order to the online discount broker there are a series of events that take place terminating in the successful execution of the trade. Here’s how […]
Podcast
- 104. Special 1 Time Dividends and Contract Adjustments
- 103. The Collar Strategy Using Long-Term Put Expirations
- 102. Analyzing Market Assessment Based on Portfolio Setup
- 101. Covered Call Writing: "Hitting a Double" on the Last day of a Contract
- 100. Analyzing LEAPS for The Poor Man's Covered call Strategy (PMCC)
- 99. Anatomy of a Reverse Stock Split
- 98. Analyzing LEAPS Options for the Poor Man's Covered Call
- 97. Managing Our Poor Man's Covered Call Trades When Share Price Drops Substantially
- 96. Protecting Our Covered Call Trades: Protective Puts and In-the-Money Strikes
- 95. Covered Call Writing to Generate Premium and Dividend Income
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