Oct 31, 2015 | Option Trading Basics, Options Calculations, Stock Option Strategies
A covered call writing-like strategy involves buying deep in-the-money LEAPS options and then selling short-term slightly out-of-the-money call options. Leaps become a stock surrogate. The term Leaps stands for Long Term Equity AnticiPation Security. They have...
Oct 24, 2015 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
Volatility is a key consideration for both stock selection and option-selling decisions. Despite its relevance to our covered call writing and put-selling selections, volatility does have its limitations and we must fully understand how we can best take advantage of...
Oct 17, 2015 | Investment Basics, Option Trading Basics, Stock Option Strategies
In Part I of this series, we discussed mergers involving cash settlement only. These events do impact our covered call and put-selling positions. In this article we will highlight mergers that involve both cash and stock and demonstrate how these corporate events can...
Oct 10, 2015 | Investment Basics, Option Trading Basics, Stock Option Strategies
Contract adjustments will change our covered call writing and put-selling positions. In the past, I have written about the effect stock splits and dividends have on our positions. In this article, I will highlight another cause of these adjustments, mergers and...
Oct 3, 2015 | Investment Basics, Option Trading Basics, Stock Option Strategies
There are certain fallacies and deceptions associated with covered call writing as there are with all investment strategies. I am the first to say that there is no one strategy right for every single investor. We must master the pros and cons of each strategy to...
Sep 19, 2015 | Investment Basics, Option Trading Basics, Options Calculations, Stock Option Strategies
When we sell covered calls or cash-secured puts we understand the factors that go into the premiums we receive: The option’s exercise price The current price of the underlying The risk-free interest rate over the life of the option Dividends, when applicable The...
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