Jan 19, 2019 | Investment Basics, Option Trading Basics, Options Calculations, Stock Investing, Stock Option Strategies
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...
Jan 12, 2019 | Investment Basics, Option Trading Basics, Options Trade Execution, Stock Investing, Stock Option Strategies
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...
Jan 5, 2019 | Covered Call Exit Strategies, Exit Strategies, Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
One of the BCI exit strategies that helps distinguish us from all other covered call writers is known as “hitting a double” We use this position management technique when share value declines such that option value drops to 20% (in the first half of a...
Dec 29, 2018 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Never sell a covered call or put option when there is an earnings report due to be reported prior to contract expiration. I have repeated this rule so many times over the years because I want our members to avoid the losses I incurred back in the 1990s before I...
Dec 15, 2018 | Investment Basics, Option Trading Basics, Options Calculations, Put-selling, Stock Option Strategies
Covered call writing, when combined with protective puts, is known as the collar strategy. The maximum gain is established by the short call strike while the maximum loss is defined by the long put strike. For example, if a stock is purchased for $48.00 per share and...
Dec 8, 2018 | Covered Call Exit Strategies, Exit Strategies, Option Trading Basics, Options Calculations, Stock Option Strategies
One of our covered call writing exit strategies when the strike is in-the-money on expiration Friday is rolling out-and-up. This is when we buy back the near-month call (buy-to-close) and sell the next month’s higher strike. There are times when share...
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