Position management is the 3rd required skill for achieving the highest level of option-selling success. One of the most important of the BCI protocols for covered call writing are the 20%/10% guidelines which assists us is closing short calls when those opportunities are presented. This allows us to mitigate situations when share price declines. These […]

Automating the 20%/10% Guidelines
Posted on July 18, 2020 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Trade Execution, Stock Investing, Stock Option Strategies, Uncategorized

Reverse Stock Splits: Understanding Contract Adjustments
Posted on May 30, 2020 by Alan Ellman in Fundamental Analysis, Investment Basics, Option Trading Basics, Options Trade Execution, Stock Investing, Stock Option Strategies
Contract adjustments to the terms of our covered call writing and put-selling options are due to corporate actions like mergers and acquisitions, special dividends and stock splits. This article will highlight the contract alterations resulting from a reverse stock split. What is a reverse stock split? This is a reduction in the number of […]

Myths and Misunderstandings About Covered Call Writing
Posted on May 23, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Stock Investing, Stock Option Strategies
Covered call writing education must include debunking the myths associated with this strategy. When certain concepts are repeated often enough, they become accepted as truths whether they are accurate or false. The purpose of this article is to refute five of the most egregious of these misrepresentations. 1. Covered call writing should be used […]

Buyers Have Rights, Sellers Have Obligations: Covered Call Writing in a Nutshell
Posted on May 16, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies, Uncategorized
Covered call writers get paid cash when selling call options. Call buyers pay cash to own the options. This article will highlight the reasons options are bought and sold as it relates to covered call writing. We will use a real-life example with CarMax, Inc. (NYSE: KMX), a stock on our Premium Stock Report on […]

REITS: Good Covered Call Writing Candidates? A Real-Life Example with PennyMac Mortgage Investment Trust (NYSE: PMT)
Posted on May 9, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
REITs (real estate investment trusts) invest directly in income-producing real estate and is traded like a stock. In September 2019, Clifton wrote to me about PMT inquiring if it would make a viable covered call writing candidate. He pointed out that this security offered an 8.5% annualized dividend yield. To evaluate, we will examine the […]

Strike Selection Using Technical Analysis and Market Assessment
Posted on April 4, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies, Technical Analysis
Stock and option selection are 2 of the 3-required skills essential to successful covered call writing (position management is the 3rd). There is no one factor that will dictate our choices but rather a mosaic of bits of information which will lead us to the best choices. In this article, I will discuss two of […]

Technical Charts: A Picture is Worth 1000 Words- A Real-Life Example with The Wendy’s Company (NASDAQ: WEN)
Posted on March 14, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Stock Investing, Stock Option Strategies, Technical Analysis
Technical analysis is one of the 3 screens we use for stock selection when selling options. The other two are fundamental analysis and common-sense principles (like minimum trading volume). In August 2019, Nick wrote to me about a trade opportunity he thought he missed with WEN. He attached a technical chart followed by a question. […]

Comparing Call and Put Strategies with Paylocity Holding Corporation (NASDAQ: PCTY)
Posted on March 7, 2020 by Alan Ellman in Investment Basics, Option Trading Basics, Options Calculations, Put-selling, Stock Investing, Stock Option Strategies
Covered call writing or selling cash-secured puts… which is the best strategy? Well, they both offer great opportunities to generate cash-flow in a low-risk manner. I favor the former in normal to bull market environments and the latter in bear and volatile markets. On June 24, 2019, PCTY passed our rigorous screening requirements to earn […]

Creating “Dividends” for Non-Dividend Stocks: A Real-Life Example with PAYC
Posted on February 29, 2020 by Alan Ellman in Fundamental Analysis, Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies, Technical Analysis
Covered call writing can be beneficial to us in a variety of circumstances. This article will highlight how this strategy can be implemented to create a dividend-like cash flow for stocks that currently offer no dividend income. This can be particularly useful for those who will only purchase dividend stocks and miss out on other […]

Evaluating Stock Purchase Price and Breakeven When Rolling Out-And-Up
Posted on December 28, 2019 by Alan Ellman in Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Options Trade Execution, Stock Investing, Stock Option Strategies
When we write a covered call, our breakeven is stock purchase price – entire call premium. If we buy a stock for $48.00 and sell an option for $2.50, the breakeven is $45.50. In June 2019, John shared with me a series of trades he executed with Planet Fitness, Inc. (NYSE: PLNT) where he wrote […]
Podcast
- 83. Setting Up a Portfolio of Nasdaq and S&P 500 Stocks in a User-Friendly Manner
- 82. Risky Stocks Can Result In Challenging Decisions
- 81. Managing ITM Covered Call Strikes When Share Price Moves Higher
- 80. Using the VIX to Achieve Higher Option-Selling Returns
- 79. Adjusting Target Goals with ETFs
- 78. REITS: Good Covered Call Writing Candidates?
- 77. Buyers Have Rights and Sellers Have Obligations- Covered Call Writing Explained
- 76. 5 Top Myths and Misunderstandings about Covered Call Writing
- 75. Reverse Stock Splits Understanding Contract Adjustments
- 74. Strike Selection Using Technical Analysis and Market Assessment
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Beginners Corner Selling-Puts
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