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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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Mean Analyst Rating (MAR): A New Addition to Our Premium Reports
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An Annualized Return of 5000% and Feeling Miserable: Interpreting Our Covered Call Trades
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Ask Alan #156 – Should I Roll My Expiring Out-Of-The-Money Weekly Option?
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Strike Price Selection When Selling Cash-Secured Puts: A Real-Life Example with WWE
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VIX Covered Call Writing: Selling Options Against Market Volatility
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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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Alan Ellman Daniel, There certainly is no reason to panic (
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Daniel Alan How are you? Based on you experience, when
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Barry B Premium Members, This week’s Weekly Stock Scr
