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using stock options to repair stock price loss

Stock Repair Strategy: Using Stock Options to Reduce Losses When Stock Price Declines

Selling covered call and cash-secured put options are used to generate cash flow. Our knowledge of these options can also be applied to mitigating losses after a stock we own declines in value. This article highlights how options can be used to reduce losses in “stock only” portfolios. Although this article was scheduled to be […]

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covered call writing calculations

Strike Selection for Portfolio Overwriting Low Cost-Basis Stocks

Portfolio Overwriting is covered call writing using existing long-term buy-and-hold securities. It implies low cost-basis shares, dividend-bearing stocks and exchange-traded funds (ETFs). Since we don’t want our shares called away while generating additional option premium, cash flow decisions must be made on the best strike prices to select for our short calls. What is the […]

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compounding option-selling profit

Compounding Our Option-Selling Profits To The Highest Levels

Covered call writing and selling cash-secured puts are cash-generating strategies. These profits can be impressive as isolated events but what if we then take these proceeds and re-invest them to amplify our returns? The BCI philosophical approach to option-selling stresses the importance of re-investing our short-term premium returns whenever possible. Of course, for many of […]

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covered call writing and technical analysis

Position Management in the Final Week of a Contract: A Real-Life Example with FIVE

Exit strategy preparation and implementation is one of the 3 required skills for successful covered call writing and put-selling. Because of the time value erosion of our options (Theta), there are limitations regarding the exit strategy opportunities as our contracts near expiration. In January 2018, Duminda contacted me about a trade he executed with Five […]

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covered call writing and the option Greeks

Understanding the Impact Implied Volatility has on Delta

For covered call writers and put-sellers, the option Greeks play a major role in our understanding of the risks and value of our option premiums. We know our option premiums consist of intrinsic value (for in-the-money strikes) + time value. Our initial time value returns reflect the time to expiration + the volatility of the […]

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covered call writing calculations

Evaluating a Portfolio from a Numerical Perspective

When we formulate our covered call writing and put-selling portfolios, we are basing our decisions on non-emotional sound fundamental, technical and common sense principles. Similarly, we can analyze a portfolio and determine the investor’s stock and overall market assessments. On November 17, 2017, Carl sent me a list of his very first covered call writing […]

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American Depository Receipts and Special 1-Time Cash Dividends/ Discount Coupons for New Book & Calculators

When viewing option chains while crafting our covered call writing portfolios, from time-to-time we will see unusual strike prices. These anomalies are usually associated with various corporate events that result in option contract adjustments. Such events include stock splits, mergers and acquisitions and the one highlighted in this article, special 1-time cash dividends. In July […]

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calculating covered call writing returns

Generating 2% – 4% in Bull Markets: How to Take Advantage of Out-Of-The-Money Strikes

The 3 required skills for covered call writing and selling cash-secured puts are stock selection, option selection and position management. This article will use real-life examples highlighting the first 2 of these skill sets in a bull market environment.   Article assumptions and guidelines Portfolio is set up in a bull market environment Target goals […]

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dividend capture and covered call writing

Combining Dividend Capture with Covered Call Writing: Pros and Cons

Why not use covered call writing with only dividend-bearing stocks to generate three income streams; option premium, share appreciation to the (out-of-the-money) call  strike plus the dividend itself? This article will explore the pros and cons of this approach to covered call writing.   Strategy theory We screen for stocks that have ex-dividend  dates  (also […]

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bear market strategies

Inverse Exchange-Traded Funds versus Shorting Stocks

In bear markets, one of the tools we can benefit from with our covered call writing and put-selling strategies is inverse exchange-traded funds (ETFs). An inverse ETF is also known as a short ETF or a bear ETF. These securities are constructed to return the exact opposite performance of a certain benchmark or index. Many […]

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