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technical analysis and covered call writing

Managing News-Driven Gap-Downs: A Real-Life Example with Stamp.Com

Earnings reports represent the greatest risk for price gap-downs for our covered call writing and put-selling stocks. Problem solved…we avoid earnings reports. However, from time-to-time unexpected negative news will be reported that will cause significant price decline. On July 25th, 2018, Earl shared with me a trade he initiated with Stamps.com (NASDAQ: STMP) and was […]

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stock dividends

Converting Non-Dividend Stocks Into Dividend Stocks

Generating a consistent cash flow from stock dividends is an appealing benefit from owning shares for many investors. Stock ownership, in these scenarios, can create two income streams, one from price appreciation and the other from quarterly dividends. However, not all securities have associated dividends and some investors will bypass these stocks even if they […]

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S&P 500 chart

Why Covered Call Writing Outperforms the Overall Market

Why should we spend the time to educate ourselves on how to implement and manage covered call writing trades? The answer is simple: Once the 3 required skills (stock selection, option selection and position management) are mastered, we will put ourselves in a position to beat the market on a consistent basis. This article will […]

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strike price selection for covered call writing

Evaluating an Initial Covered Call Writing Portfolio

Setting up our covered call writing and put-selling portfolios requires common sense analysis once our watch lists have been established. Considerations include proper stock and industry diversification, appropriate cash allocation to each position and.  strike selection that will maximize our returns and reflect personal risk-tolerance and overall market assessment. In this article, I will dissect […]

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technical analysis for covered call writing

Price Charts Tell a Story and Provide Guidance in Formulating Our Investment Strategies

Technical analysis is one of the critical tools available to us in selecting the best stocks for our option-selling strategies. Price charts are much more than a sequence of dots and lines…they tell a story about a company which, with proper research, ultimately leads to a series of rules and guidelines that will assist in […]

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option liquidity and bid-ask spreads

After-Hours Bid – Ask Spreads Can Be Deceiving

One of the BCI guidelines for selling covered call and cash-secured put options is that we require a bid-ask spread of $0.30 or less and/or an open interest of 100 contracts or more. Typically, options with large open interest will also be associated with smaller spreads. This makes it easier to close short positions at […]

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covered call writing with blue chip stocks

Dow 30 Stocks and Covered Call Writing: Implementing the Premium Blue Chip Report

The risk inherent in covered call writing and put-selling is related to price decline in the underlying security. Investors with low-risk tolerance may turn to blue chip stocks which have proven track records of being reliable, cash-rich securities that frequently also generate dividends. This article will highlight how to utilize the monthly BCI Premium Blue […]

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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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