On April 8,2021, Nathan shared with me his covered call writing trade with PAVE which was initiated 3 days earlier. This exchange-traded fund had a strong technical chart but the price started declining immediately after the trade was entered. Nathan commented that he read in a technical analysis book that when share price breaks out […]
How to Set Up a Portfolio of Nasdaq and S&P 500 Stocks in a User-Friendly Approach
Covered call writers and sellers of cash-secured puts know the importance of portfolio diversification. If one security under-performs, the others can compensate. This article will demonstrate how to craft a portfolio of large-cap tech and blue-chip companies for our option-selling strategies. Strategy goals Portfolio mix of blue-chip and technology companies User-friendly system Broad diversification […]
Holding a Stock Through an Earnings Report: A Real-Life Example with Atlassian Corp. (Nasdaq: TEAM)
Covered call writers are frequently faced with scenarios when earnings reports are due out on securities where we have long-term bullish assumptions. In October 2019, Mark shares with me a dilemma he was facing with TEAM. The October 2019 monthly contracts expired on 10/18/2019 but there was an earnings release due on 10/17/2019. This article […]
How to Use Technical Analysis and Market Assessment for Strike Selection Guidance
Strike price selection is the second required skill for our covered call writing and put-selling portfolios. Stock (and ETF) selection and position management (exit strategies) are the other two. This article will highlight how we can use overall market assessment and price chart analysis to help guide us to the best strike price selections. […]
Adjusting Target Goals with ETFs
Exchange-traded funds are baskets of stocks some going up and others going down in price. Generally, this makes these securities less volatile than individual stocks. Lower implied volatility translates into lower option premiums. Of course, there are exceptions but covered call writing with ETFs will usually provide better diversification and less risk at the expense […]
Dividend Yield Should Be a Secondary Factor When Selecting Stocks for Our Covered Call Writing Portfolio
Combining covered call writing premiums with high dividend yields can be an enticing investment approach. In October 2019, Gerry wrote to me about using MPLX LP (NYSE: MPLX) in her option-selling portfolio and pointed to the generous dividend yield and real-estate component as the reasons for this consideration. In the BCI methodology, we use fundamental […]
Strike Selection Using Technical Analysis and Market Assessment
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)
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. […]
Creating “Dividends” for Non-Dividend Stocks: A Real-Life Example with PAYC
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 […]
Using The Ellman Calculator to Monitor “Hitting a Double” Results
One of our BCI covered call writing exit strategies is titled “hitting a double” This opportunity arises when share price declines after a covered call position is opened, short calls are bought back using our 20%/10% guidelines and then the same option is re-sold when share price rises. This article will highlight how to use […]
Podcast
- 66. Comparing the Cost-To-Close Covered Call Trades with Time-Value Return Goals
- 65: The 20%/10% Guidelines for Covered call Writing and Selling Cash-Secured Puts
- 64. Creating Dividend Like Income for Non Dividend Stocks
- 63. Rolling Decisions on Expiration Friday
- 62. Should I Unwind My Covered Call Trade 1 Week Prior to Contract Expiration?
- 61. Realized Versus Unrealized Capital Gains (Losses) for Covered Call Writing
- 60. Combining ITM Call Strikes & Stock Dividends to Protect in Bear Markets
- 59. ANALYZING 2 Month and 4-Day Covered Call Trades
- 58. Is This Trade a Winner or a Loser?
- 57. Evaluation Stock Purchase Price and Breakeven When Rolling Options
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