Jun 15, 2019 | Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
One of our favorite option-selling strategies is selling cash-secured puts. This involves selling (usually out-of-the-money) put options and securing the possible future contract assignment with the appropriate amount of cash. What about cash-secured call options also...
Jun 1, 2019 | Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
Call options can be used to reduce losses on long stock positions. Depending on the degree our share value has declined, our target can be to lower our breakeven point or to lock-in but reduce losses. In December 2018, Sunny shared a stock repair trade he was...
May 18, 2019 | Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
Portfolio overwriting is a covered call writing alternative strategy where out-of-the-money call options are sold against long-term buy-and-hold positions. Generally, these stocks are of a low cost-basis and generate dividend income. We want to avoid assignment to...
May 11, 2019 | Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Put-selling, Stock Investing, Stock Option Strategies
Selling cash-secured puts can be used to generate monthly cash flow and to buy a stock at a discount. It can also be used to lower the cost-basis of shares already owned. In November 2018, John shared with me a trade he was in with Halliburton Company (NYSE: HAL)...
May 4, 2019 | Fundamental Analysis, Investment Basics, Option Trading Basics, Stock Investing, Stock Option Strategies
The screening process for option-selling watchlists includes fundamental analysis, technical analysis and common-sense screens. The BCI team recently added a new screen, the mean analyst rating (MAR), to replace the Scouter Rating (risk/reward) which we had been using...
Apr 27, 2019 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
One of our covered call writing exit strategies is converting dead money to cash profits (CDMCP). When share price is declining and under-performing the overall market, we first close the short call and then sell the stock. The cash generated from the sale of the...
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