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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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stock selection for covered call writing

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 […]

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coverred call writing asnd technical analysis

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 […]

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covered call writing and stock splits

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 […]

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volatility-based ETNs

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 […]

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bear market strategies

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 […]

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