When we roll-down our covered call trades, we generally do so to an out-of-the-money (OTM) strike to allow for share price recovery. However, in the final week of a monthly contract, if we hold a security, we will not use in the following contract month, it frequently makes sense to roll-down to an ITM strike. […]
After-Hours and Pre-Monday Morning Market Trading Bid-Ask Spreads
Many members of our BCI community have commented on the wide and, therefore, unfavorable bid-ask spreads that are published before the markets open and after they close. This article will explain this deviation and address how to manage these scenarios. What is after-hours trading? This is the exchange of securities outside the exchange’s normal […]
Explaining “Bought-Up” Value When Rolling a Covered Call Out-And-Up
One of our key covered call writing exit strategies is rolling an option when the strike is in-the-money at expiration and we want to retain our shares. We can roll-out to the same strike at a later date or out-and-up to a higher strike at a later date. For both. there will be an intrinsic-value […]
Exit Strategies for Covered Call Writing: “Hitting a Triple” with XLU
Benefitting from exit strategies, in our covered call writing and put-selling portfolios, is the result of preparation and opportunity. Our 20%/10% guidelines for covered call writing protects us when share price declines and guides us as when to close the short calls. This allows us take further action including selling the stock, waiting to “hit […]
“Hitting a Put Triple” with Lowe’s Companies, Inc. (NYSE: LOW)
Exit strategies for covered call writing and selling cash-secured puts are an integral part of the BCI success model. In April of 2021, Tom was excited to share with me a series of trades he astutely executed with LOW where he generated 3 income streams with the same stock in the same contract month. […]
Stock Repair Strategy: A Real-Life Example with Lyft, Inc. (Nasdaq: LYFT)
Stock options have a myriad of applications. With our covered call writing and put-selling strategies, we seek to generate cash-flow in a low-risk manner. Another utilization of stock options is to mitigate losses when share price declines. This is known as the stock repair strategy. It is used when a stock is purchased ( with […]
The Poor Man’s Covered Call (PMCC): Explaining Upside Potential + Premium Membership News
When using the PMCC strategy, a covered call writing-like strategy, our goal is to generate cash flow with a lower cash investment than traditional covered call writing. The BCI PMCC Calculator shows initial time-value returns from this short call premium as well as the upside potential should share price accelerate. This article will analyze this […]
Selling Cash-Secured Puts to Simultaneously Generate Cash Flow and Buy a Stock at a Discount
Selling cash-secured puts is a low-risk option-selling strategy geared to generating cash flow and beating the market on a consistent basis. In certain scenarios an additional goal of buying the stock at a discount is added to traditional put-selling. This article will analyze such a dual-purpose trade proposed by Safi on April 23rd 2021. […]
Rolling-Down with a Few Hours to Expiration: A Real-Life Example with Energy Select Sector SPDR (NYSE: XLE)
The 20%/10% guidelines are essential to our covered call writing exit strategies. They represent parameters as when to buy back our short calls. A frequent inquiry I receive related to these parameters is whether to remove the 10% BTC limit orders in the last few days of a contract. The thinking is that the cost-to-close […]
Can Price Movement Be Explained by Profit-Taking?: A Real-Life Example with Global X Funds Infrastructure Dev. (PAVE)
On April 8,2021, Nathan shared with me his covered call writing trade with PAVE which was initiated 3 days earlier. This exchange-traded fund had a strong technical chart but the price started declining immediately after the trade was entered. Nathan commented that he read in a technical analysis book that when share price breaks out […]
Podcast
- 73. Mid Contract Unwind Exit Strategy at the End of a Contract
- 72. Rolling Covered Call Options on Expiration Friday
- 71: Dividend Yield Should Be a Secondary Factor for Covered Call Writing
- 70. COMPARING CALL AND PUT SELLING STRATEGIES
- 69. Technical Analysis with The Wendy's Company NASDAQ WEN
- 68. Volatility A Friend or Enemy to Covered call Writers and Put Sellers?
- 67. Should We a Short Put to Help Fund a Collar Trade?
- 66. Comparing the Cost-To-Close Covered Call Trades with Time-Value Return Goals
- 65: The 20%/10% Guidelines for Covered call Writing and Selling Cash-Secured Puts
- 64. Creating Dividend Like Income for Non Dividend Stocks
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