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Entering a Collar Trade: A Real-Life Example with iShares Silver Trust (NYSE: SLV) + New Product with Discount Coupon

The collar strategy is a covered call writing-like strategy where a protective put is added to the covered call trade. In this article, the initial structuring of a collar trade will be highlighted using SLV, an eligible exchange-traded fund in our Premium ETF Report in August 2020.   The 3-legs of a collar trade STOCK: […]

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Portfolio Overwriting with Apple Computer (NASDAQ: AAPL)

Portfolio overwriting is a covered call writing alternative strategy. Our goals include increasing our returns by a modest amount while still retaining ownership of the shares. Deep out-of-the-money strikes are sold with specific annualized returns in mind, let’s say 6% for purposes of this article. Apple Computer is a widely held stock by many of […]

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Automating the 20%/10% Guidelines

Position management is the 3rd required skill for achieving the highest level of option-selling success. One of the most important of the BCI protocols for covered call writing are the 20%/10% guidelines which assists us is closing short calls when those opportunities are presented. This allows us to mitigate situations when share price declines. These […]

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covered call writing calculations

Managing In-The-Money Strikes When Share Price Moves Higher

When we sell in-the-money call options, we are generating initial time-value profit that meets our stated goals plus creating downside protective of that time-value profit in the form of intrinsic -value. The disadvantage of these options is that we do not benefit from share appreciation because of our contract obligation to sell at the lower […]

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Reverse Stock Splits: Understanding Contract Adjustments

Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions, special dividends and stock splits. This article will highlight the contract alterations resulting from a reverse stock split.   What is a reverse stock split? This is a reduction in the number of […]

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Mid-Contract Unwind Exit Strategy at the End of a Contract

Exit strategies for covered call writing and sell cash-secured puts is one of the 3-required skills that must be mastered. The mid-contract unwind (MCU) exit strategy is used for covered calls when share price moves substantially above the strike price, leaving the strike deep in-the-money. One of the characteristics of a deep ITM strike is […]

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Collar Calculations: Adding Protective Puts to our Covered Call Trades

Covered call exit strategies play a major role in mitigating losses in our BCI methodology. In most cases, we can keep losses to a minimum, turn losses into gains and enhance profits as well. Some covered call writers want the security of protecting against a catastrophic gap-down which can occur rarely. With the current market […]

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covered call writing exit strategies

Comparing the Cost-to-Close with Initial Trade Goal

When we enter our covered call trades, we make our stock and option selection based on our initial time-value return goal (2% – 4% for 1-month expirations in my case). If the strike moves deep in-the-money as share price accelerates, we may consider closing both legs of the trade or rolling the option out or […]

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poor man's covered call calculations

Protective Puts and The Poor Man’s Covered Call

The Poor Man’s Covered Call (PMCC) is a covered call writing-like strategy where the underlying security is a LEAPS options (1 -2 years expirations) rather than the stock itself. The technical term is a long call diagonal debit spread. Since the cost of the option is lower than the price of the stock, the return […]

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Comparing ITM Calls and OTM Puts in Bear Markets

Covered call writing and selling cash-secured puts are both outstanding low-risk strategies that can outperform the overall market on a consistent basis. I am on record as favoring covered call writing in normal to bull markets and include put-selling in bear markets. In normal to bull markets, covered call writing gives us the flexibility to […]

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