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 […]
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 […]
Protecting Unrealized Profits When Share Price Accelerates
Covered call writing dilemmas can frequently result from positive circumstances. In August 2017, Vincent shared a trade he executed where an out-of-the-money strike was sold and share price had moved up significantly and was approaching the strike price. This means that Vincent realized an initial option premium return plus had an unrealized share appreciation component […]
Stocks Moving On and Off our Premium Stock List: A Technical Perspective
When we select stocks for covered call writing or selling cash-secured puts we factor in fundamental, technical and common-sense screens (like minimum trading volume). This screening process is the foundation of our Premium Stock Reports. Frequently we will notice stocks removed from these lists only to return shortly thereafter. The reason for these whipsaws are […]
Stock Splits Can Cause Panic: Relax, All is Well
You write a covered call on a stock trading at $165.00 and sell the $170.00 call option. A few days later, your stock is trading at $28.00 and the strike you sold no longer appears on option chains. What do we do? Panic? Curl up into the fetal position and feel sorry for ourselves? Research […]
Market Volatility and VIX-Based Exchange-Traded Notes
Our covered call writing and put-selling portfolios have been significantly impacted the past few weeks from extreme market volatility. In addition to rising wages, inflation concerns and projected interest rate hikes, volatility based exchange-traded notes are also playing a role in the market decline. What is the VIX? The VIX is also known as […]
Shorting a Stock: A Viable Bear-Market Strategy?
Our approach to covered call writing and put-selling in bear markets include an arsenal of trading concepts that will enhance our opportunities for successful outcomes. These include: Use of deep in-the-money calls Use of deep out-of-the-money puts Use of lower implied volatility securities Use of low-beta stocks Use of exchange-traded funds Lowering our time value […]
Price Gaps and the Need for Exit Strategy Execution
Position management is one of the 3 required skills needed for covered call writing and put-selling. When share price gaps up or down there is a strong possibility that an exit strategy opportunity will present itself. There are times, however, when no action is the best action. On June 26th, 2017, Luis contacted me about […]
Russell Rebalancing Day: A Cause for Concern?
Covered call writers and put-sellers are aware of the value to avoiding risky events like earnings announcements. An impending FDA announcement regarding the efficacy of a new drug being tested is another example. This article will define and explore the potential concerns of trading on or though Russell Rebalancing Day. What is Russell Rebalancing Day? […]
Pros and Cons of Covered Call Writing: Calculation Perspective
Every investment strategy, including covered call writing and selling cash-secured puts, has advantages and disadvantages. When we decide to implement a plan, it is with the understanding that we accept and embrace these pros and cons. It is not productive to look back and say we could have made more money using a different approach. […]
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Combining Dividend Capture with Covered Call Writing: Pros and Cons
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Ask Alan 147 – “Why is the Ellman Calculator Showing Negative Returns?”
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The Mysteries of a Put Sale
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Technical Analysis Impacting Stock Eligibility for Option-Selling
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Rolling Out-And-Up: Explaining the “Bought-Up” Value of our Stocks
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The New Stock Market- Algorithmic and High Speed Trading
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Options That Expire Weekly and Conventional Expiration Cycles
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Why the 3% Guideline Applies to Puts but Not to Call Options
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Earnings Pre-Announcements Explained and Categorized
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Tax Implications of Writing Covered Calls against Long-Term Holdings
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Jay Thanks for the update, Mario, great results in a d
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Alan Ellman Greg, I am a firm believer in asset allocation.
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Greg Alan, What is your recommendation or best pract
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MarioG Trading Experiences through June 15, 2018 Expirati
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