Exit strategy execution is critical to maximizing our covered call writing success. But what approach should we use if the underlying equity declines in value? Many investors use a stop loss order when a stock they own declines in value. The question then becomes is this the best approach for covered call writing? There are […]
Out-Of-The-Money Strike Prices: Pros and Cons for Covered Call Writing
Whenever a study is performed on covered call writing a stock is selected and the nearest out-of-the-money (O-T-M) strike price is sold. This is repeated over and over and then the results are compared to the overall market performance. The usual conclusion is that covered call writing slightly outperforms the overall market but with much […]
Covered Call Writing Exchange-Traded Funds
As covered call writers we strive to generate monthly cash flow by selling call options in a conservative, low-risk environment. This approach is quite appealing to many retail investors but many look to fund managers to take advantage of this great strategy. As a result there are now 31 closed-end funds that use covered call […]
Facebook and the Greenshoe Option
When studying covered call writing we learn to master stock investing as well as option trading basics. Then we become elite investors by focusing in on the inter-relationship between the two. In this regard, a story most of us have been following the past two weeks has been the initial public offering (IPO) of Facebook […]
Entering Our Covered Call Positions Mid-Contract
In the BCI methodology for covered call writing we use predominantly 1-month options. There are times, however, where we find cash in our accounts (mid-contract) that is inactive. This may be due to closing a position early either because the share price declined significantly or accelerated exponentially. Perhaps Grandma gave you a generous birthday present. […]
Covered Call Writing and The CBOE’s Volatility Index (VIX)
Stock options strategies, including covered call writing, factor in a multitude of parameters including fundamental and technical analysis as well as many common sense principles. In my books, DVDs and seminars I discuss determining market tone before making any investment decisions. One of the main factors I utilize in this determination is the VIX. The VIX […]
Covered Call Writing Using The Blue Collar Methodology
Fundamental analysis, technical analysis, common sense principles and calculations are all critical considerations when selling stock options the Blue Collar way. Since this is my first article written on our newly enhanced web site (hope you like it!) I thought it appropriate to use a real-life example to review the basic tenets of our BCI […]
Covered Call Writing: Factors That Affect The Value Of Our Option Premiums
So you sold an options contract for $380 and generated a 3.5% 1-month return. Did you ever wonder how the market determined the value of that options contract to be $380? The simple equation that most of us know and understand is the following: Option premium = Intrinsic Value + Time Value To review, let […]
Covered Call Writing: Mid-Contract Unwind Exit Strategy
Mid-Contract Unwind: The major concern for covered call writers is the stock price dropping in value. The option premium collected is money in the bank. Most of our exit strategies are designed to mitigate these losses and turn losses into gains. However, as Blue Collar Investors we should also be prepared to act if the opposite […]
Covered Call Writing and Holding a Stock Through an Earnings Report
With expiration Friday and earnings season fast approaching our common sense principles (see chapter 8 of my latest book) become even more important. Never sell a covered call option with an upcoming earnings report is a critical BCI rule. But what if you own a stock and love it! Hopefully, your admiration for the stock […]
Podcast
- 50. Exit strategies Must Be Timed Properly
- 49. Analyzing a Multi Leg Covered Call Rolling Down Series of Trades
- 48. Rolling Deep OTM Cash Secured Puts
- 47. Rolling Up in the Same Contract Month
- 46. Should Delta Be the Sole Criteria for Covered Call Writing Strike Selection
- 45. Implied Volatility and Expected price Movement During the Life of Option Contracts
- 44. Can We Use ITM Strikes to Create a No Risk Covered Call Strategy?
- 43. Converting a Covered Call Trade to a Collar Trade
- 42. Why Was My OTM Put Exercised?
- 41. Collar Trades When Call Strikes Move Deep In The Money
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