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Collar Calculations: Adding Protective Puts to our Covered Call Trades

Covered call exit strategies play a major role in mitigating losses in our BCI methodology. In most cases, we can keep losses to a minimum, turn losses into gains and enhance profits as well. Some covered call writers want the security of protecting against a catastrophic gap-down which can occur rarely. With the current market volatility caused by the coronavirus crisis, I felt this would be an appropriate topic to discuss. One way to accomplish this is by purchasing a protective put in what is known as the collar strategy. Here’s how it works:

The collar strategy

  • Buy a stock
  • Sell an out-of-the-money call option (strike higher than current market value)
  • Buy an out-of-the-money put option (strike lower than current market value)

Goals of this strategy

  • Generate cash flow
  • Protect against catastrophic price decline in the underlying security (advantage)


  • Lower returns
  • Managing 3 positions instead of 2

Real-life example with Commercial Metals Company (NYSE: CMC)

In this article we will calculate the hypothetical returns using no puts (initial calculations using The Ellman Calculator) in one case and evaluating 3 different strike prices for implementing the collar strategy with protective puts (using the BCI Collar Calculator). I am using Commercial metals Company in this example as it has been appearing on our premium watch list in December 2019, has decent returns and several choices of strike prices. Here are the stats at the time I am writing this article:

CMC Stats on 12/31/2019

Current price = $22.33

Call strike selected = $23.00

Put strikes to evaluate = $18.00, $19.00and $20.00

CMC call option-chain

CMC Call Option-Chain on 12/31/19


CMC Initial Calculations using as of 12/31/19

CMC: Initial Time-Value Return Calculations

We glean the following stats from the Ellman Calculator

4.0%, 7-week return

3.0% upside potential from current market value to the $23.00 strike

7% potential 7-week return

52% maximum potential annualized return


CMC put option-chain

CMC Put Option-Chain on 12/31/19

CMC Collar Calculations using The BCI Collar Calculator as of 12/31/19

CMC Collar Calculations on 12/31/19

Initial returns range from 1.79% to 3.13% or 12.57% to 22.00% annualized. If share price moves above the $23.00 call strike, maximum initial returns run from 4.79% to 6.14%. If share price declines below the put strike, losses range from 8.64% to 16.26%.


  • The initial return not using protective puts is significantly higher than when including them (ROO column)
  • If the share price closes above the call strike price (>call strike column), not buying a put produces the best results (7%)
  • If the share price closes below the put strike, the smallest losses occur for the higher strike put prices but all still result in losses
  • Position management can also be used in the collar strategy but is more involved and may require more time because the investor is in 3, rather than 2, positions


Using protective puts or the collar strategy for covered call writers is a viable and sensible approach to this strategy. However, it does have its advantages and disadvantages. The main advantage is that the call writer is protected against catastrophic share depreciation below the put strike. This is especially beneficial in volatile markets like we are experiencing now. The main disadvantage is that the initial profits generated from the sale of the call option will be substantially lower due to the debit resulting from the purchase of the put. The main reason for a stock price gap-down is a disappointing earnings report and we avoid those situations in our BCI methodology. However, unexpected bad news can come out at any time. Although that scenario is rare, some investors may prefer the protection afforded by protective puts. There is no right or wrong here. Each investor must make his (her) own determinations. I personally do not buy puts but have absolutely no problem with members who do. In extreme markets as we are currently experiencing moving to cash and using inverse ETFs can also play useful roles.


For more information on the collar strategy


Collar Calculator

Your generous testimonials

Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to share some of these testimonials in our blog articles. We will never use a last name unless given permission:


Great video and great strategy. Thank you for posting and providing your educational perspective on this. I appreciate everything you do to help the retail investor truly be the CEO of his/her own money.


Many thanks,



Upcoming event

1. Wednesday April 8, 2020 Options Industry Council (OIC) Free Webinar

4:30 ET

Covered Call Writing to Generate Monthly Cash-Flow:

Option Basics and Practical Application

Register here.

2. East Michigan AAII Chapter: Live Webinar

April 23 @ 7:00 pm9:00 pm

Covered Call Writing to Generate Monthly Cash-Flow

Option Basics and Practical Application

Thursday April 23rd

7 PM – 9 PM

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Alan speaking at a Money Show event


Market tone data is now located on page 1 of our premium member stock reports and page 8 of our mid-week ETF reports.



About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

40 Responses to “Collar Calculations: Adding Protective Puts to our Covered Call Trades”

  1. Murali March 28, 2020 5:46 am #


    I am creating a covered call sell to open, picked the stock i want to buy, define the expiry date and strike price.

    I get stuck on the “Limit” option.

    I thought this relates to Strike price and entered the strike price in limit option.

    This results in my order as pending.

    I am told by Vanguard that Limit for that specific stock is between 2.3 to 7. How do I find out?

    Thank you


    • Alan Ellman March 28, 2020 7:27 am #


      When we place a limit order, we are instructing the broker to buy or sell (sell in this case) at a specific price or better. The market-maker can choose to accept or reject that limit order.

      The bid-ask spread in this case is $2.30 – $7.00. That’s a wide spread. We favor options with adequate “liquidity” or open interest. The BCI guideline is 100 contracts of OI or more and/or a bid-ask spread of $0.30 or less. So step 1 is to check the open interest because the spread is quite wide.

      Okay, let’s say we have adequate liquidity or just want to move forward anyway. This is where we leverage the “Show or Fill Rule” Here’s how it works: We place a limit order below the mid-point of the spread when selling. In this case, the mid-point is at $4.65, so I might place a limit order at $4.50. At this point, the market-maker must either execute the trade or publish it. If it rejects the limit order at $4.50, the new bid-ask spread will be $2.30 – $4.50. We can then enter a new limit order based on the new spread.

      Here is a link to an article I published a few years ago that will give more details:


  2. Barry B March 28, 2020 9:15 pm #

    Premium Members,

    This week’s Weekly Stock Screen And Watch List has been uploaded to The Blue Collar Investor premium member site and is available for download in the “Reports” section. Look for the report dated 03/27/20.

    Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them at The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:


    Barry and The Blue Collar Investor Team

    [email protected]

    • Charles March 29, 2020 4:21 pm #

      Thank you Barry !

      Hope everyone is safe !


  3. Daniel March 29, 2020 2:02 am #


    How are you? Good morning. I hope you are fine and you family as well.

    Just a quick question about liquidating companies.

    Supposing you have shares of company A and it gets liquidated, would you get paid in proportion of the total liquidation value vs number of shares you hold ? Being that the case should you be OK if you bought such shares at a price way lower than company A current book value per share? I say liquidating because even declaring bankruptcy there should be a liquidating process in which, for this case, assets are greater than liabilities.

    I appreciate if you could help me with this question.

    Have a good day


    • Alan Ellman March 29, 2020 6:44 am #


      Unfortunately, as retail investors owning common shares of stock, we are last in line to receive any cash from a company declaring bankruptcy and liquidating assets.

      First of all, the stock becomes worthless but there may be money left over for distribution. However, we are last in line after the government, financial institutions suppliers, utility companies, bondholders and preferred shareholders. We come next.

      Takeaway: Stay away from stocks that have poor fundamentals. Fundamental analysis is the first step in the BCI screening process and we only accept elite-performers.


  4. Ellen March 29, 2020 7:26 am #


    I am new to options and going thorough your beginners videos. Very informative and easy to understand. Thank you.

    My question is about bid and ask prices. I understand that we sell at the bid price and buy at the ask price. So my question is how these prices are set or determined?

    Thanks a lot.

    • Alan Ellman March 29, 2020 4:23 pm #


      Based on broker orders, the “bid” is the highest price a person is willing to buy and the “ask” is the lowest amount they are willing to sell. The difference is called the “spread” which includes market-maker costs.

      Be sure to leverage the “Show or Fill Rule” whenever those opportunities present.


  5. Charles March 29, 2020 3:56 pm #

    Hi Alan , hope you are fine !

    I have this strategy , instead of buying a put protection , I try to keep in mind that ( just buying 100 shares first with its covered call ) , if the stock I am using for the Covered Call strategy goes down in price ( must be a good stock that meets criteria ) , I am ready to buy another 100 shares, this way the new cost of the shares ( 200 shares now ) will be reasonable to place another Covered Call for 2 contracts and keep going . Of course management is important .

    What is your thought ?

    Thank you

    • Alan Ellman March 29, 2020 5:06 pm #


      This strategy is frequently referred to as “averaging down” Let’s say we bought 100 shares of a stock for $60.00 and it dropped to $40.00. Buy purchasing 100 more shares at $40.00, our average cost-basis is now $50.00.

      The question we must ask ourselves is “based on fundamental, technical and common-sense analysis, would we buy this stock today” If the answer is “no” then doubling our position would not be in our best interest and perhaps result in compounding the problem.

      Other approaches that should be considered include:

      1. Using our exit strategy arsenal (20%/10% guidelines, rolling-down, closing the entire position) and using the cash in a better-performer etc.

      2. If we insisted on doubling our position to average-down, first sell an OTM cash-secured put such that, if exercised, the shares would be purchased at a discount from current market value.

      3. Use the stock repair strategy where we can average down without putting more cash into the trade. Here is a link to an article I published on this topic:

      Here is a link for information on the BCI Stock Repair Calculator


      • Charles March 29, 2020 5:26 pm #

        Great , I got it Alan !

        Thanks so much !!

    • Roni March 30, 2020 2:59 pm #

      Hi Charles,

      the way I see it, if a stock that I bought, and believed it would go up, is contradicting my expectations, and drops significantly in the first half of the monthly options cycle (aprox. 8% or more), permitting me to buy back the call for 20% of the initial value, or less, I may hold it for another day or two, consider liquidating to avoid further losses, roll down to mitigate depending on circumstances.

      But never buy more shares, because the market is showing me that it was a bad choice. The chances of dropping further are much higher than a rebound.
      Why take the risk?
      We are not gamblers, we are (small) traders.

      Use the money to start a new trade with a different stock as Alan says.


  6. Charles March 29, 2020 4:03 pm #

    Alan , I have another question :

    I have 100 XOP (etf ) and
    sold 1 covered call position for May and it is going to split .1:4

    How will be the procedure for this position ?


    • Alan Ellman March 30, 2020 6:52 am #


      Contract adjustments, like reverse stock splits, have no one specific formula. These type of splits are used to make the security appear more stable and, in some cases, to avoid de-listing from larger exchanges. In this case, the contracts will deliver 1/4 the price of the quadrupled price post-split. Here is a link to the specifics of this split (copy and paste):


      Here is a link to an article I published on reverse stock splits:


      • Charles March 30, 2020 10:15 am #

        Thank you Alan !


  7. Peter March 29, 2020 4:26 pm #


    I noticed on page 30 you listed your 4 places to find
    your best stocks for trading. My question is how is Can Slim any different than Smart Select ratings looking for all green circles in other words How does CAN Slim add to the mix? By the way if Iam asking to many questions please advise


    • Barry B March 29, 2020 5:06 pm #


      I include the CANSLIM list in the Weekly Stock Screen And Watch List report. If there are any CANSLIM stocks that meet our criteria (outside the IBD 50 and IBD Big Cap 20) they are included. They are identified by “CSS” in the column “Wkly Rank or Other Source”.

      In order for a stock to be included in the weekly report, regardless of the source, it must pass all of the six smart select ratings with all green indicators.



  8. John March 30, 2020 4:15 am #


    I have just ordered your encyclopedia after you were so kind to actually call me to tell me which book to get. I think you suggested Covered Call Alternative Strategies, so will get it when I finish the encyclopedia.

    I have been selling puts and calls for over a year and doing quite well. At the AAII conference you said the “sweet spot” was about a month out and you looked for about a 2% return for your mother per month and went for about 4% for your own account.

    A high school friend (I am 75 with an MBA, JD, and CPA and he went to the London School of Economics–so neither of us are dummies) told me he was doing one week calls on T. I found it produced for him, when it was around $38/shr, a return on the time value of just under 1% so got the list of one week options from the OIC’s website and have been doing them on many other companies.

    I try to do them on all assets in my IRA and seek about 1% on either stock (covered calls) or cash (cash secured puts). One week options on dividend paying stocks cut down the beta risk.

    I have wondered what you thought of that strategy since you seek low beta items by avoiding earnings calls and events that would increase volatility.

    In this declining market puts are being assigned and I do calls the next week, continuing to make excellent premiums but as the market dives my assets are declining. When the market rises my upside will be limited, but my thinking is “who cares” so long as my assets are earning 1% a week whatever the underlying assets are. Is this just wishful thinking or is there nothing wrong with that?

    I am not unmindful of the stock fundamentals and use the AAII Stock Investor Pro program and data each weekend to pick “put” companies that I would like to own anyway. I now view myself as not so much an investor, but as one who sells insurance so that the odds are always in my favor due to the OTM premiums! The risk seems to be that I buy stocks on the way down and sell them on the way up which is not intuitive, but sure has been working! and probably would work even better in a stable market.


    • Alan Ellman March 30, 2020 7:27 am #


      You are spot on when you say that the odds are thrown in our favor when we lower our cost-basis by selling options… calls or puts. This is why we should beat the market on a consistent basis.

      The current market environment is a challenging one. Even the institutional investors are unsure as how to manage it. So let me respond in terms of normal market conditions:

      I, personally, prefer Monthlys but strongly believe that good money can also be made with Weeklys. Now, a 52% annualized return is unrealistic on a consistent basis although I have reached that plateau a few time in strong bull markets where I could consistently tale advantage of OTM strikes.

      In 2008, I beat the market by 22% but still lost 15% of my portfolio value before moving to cash (wish I would have turned to inverse ETFs!).

      Our objective when selling options is to beat the market on a consistent basis. We will hit singles and doubles all day long but never grand slam home-runs. Mastering exit strategies is critical to achieving the highest possible returns.


  9. Karl April 1, 2020 1:11 am #

    Alan :

    Many thanks for inviting me to your webinar on April 8 ; I have registered for it .I would also appreciate your making available to me whatever you have written on the subject of Covered Strangles . As I mentioned previously, I passed the Series 4 Exam (Registered Options Principal) and Registered Investment Adviser exam years ago . I just wanted you to know that I will certainly understand the content of what you have written , regardless of how technical it may be . I have great respect for your expertise , Alan .

    If you ever have a speaking engagement in the Upper Midwest (Chicago, for instance), please let me know .

    Best regards,

  10. Murali April 1, 2020 2:23 am #


    I have read your cash secured puts end-to-end.

    This is how did my first cash secured put:

    Stock: JPM

    Sold a put with expiry date of May 15’th, $80 strike price with “Sell to Open”.

    When it came to the Limit, Vanguard is telling me the limit is meant for the contract.

    When i wrote 1 contract, it showed bid of $4.00 and ask of $4.20

    I entered $4.10 in the limit and the put got executed immediately.

    One thing i was expecting was, I would be getting paid $380 as premium.

    Instead, I got charged $380.

    I don’t understand what mistake i made here.


    Thank you


    • Alan Ellman April 1, 2020 6:45 am #


      As long as you entered a sell-to-open (STO) limit order, you made no mistake. Now, the way it’s posted in your broker account is a bit tricky. It will reflect a debit (parenthesis in red as an example) because the position is still “open”

      However, if you check your cash account, the money will be there.

      Once the option is closed, expires worthless or is exercised that “apparent” debit will disappear.

      Keep up the good work.


      • Murali April 1, 2020 10:51 am #

        This is great relief to hear from you.

        Thank you


        • Murali April 1, 2020 5:55 pm #

          just got confirmation from Vanguard.

          They credited $408 on my first cash secured put.

          Either the put can turn worthless and i pocket $408 (or) JPM gets assigned to me for $80 at a cash discount if it gets called out.

          I am excited to do more.

          I also bought a covered call for AT&T today.

          Getting my feet wet to get the feel of the process.

          Thank you for writing a wonderful book which is very self-explanatory.



          • Alan Ellman April 2, 2020 6:32 am


            I’m excited for you and , based on your emails over the past month or two, I know you are working hard to master these strategies.

            One great way to learn during extremely challenging market conditions is to paper-trade hypothetical accounts. Then, when market conditions normalize, we can move to generating cash-flow with real-life trades.


  11. Hoyt T April 1, 2020 8:34 am #

    Hey Roni,

    Hope you and your wife are holding up well down there in the southern hemisphere.

    Good to see your reply above. I am in agreement with you. We probably need to qualify that we are usually talking about “normal” times.

    It has been my experience that doubling down on declining stocks rarely, rarely is the key word, worked and that doubling down on calls almost never works. Thirty or forty years ago there was a strategy, Martingale, I believe it was called, where you kept doubling down until there was an up day. You may have to have real deep pockets to do that.

    You are absolutely right we should not be gamblers. We should see what we do as small traders. Our job is to follow the probabilities. Always, I mean always, make the statistically correct decision. Leave the emotions in the other room when we sit down to the computer, or in my case, the laptop or iPhone.

    Keep up the good work, Roni. May God bless and keep you and your wife safe through this ordeal.

    Hoyt T

  12. Alan Ellman April 1, 2020 5:38 pm #

    ETF report + Delta-neutral portfolio:

    Premium members:

    The latest ETF Report has been uploaded to the member site. I have updated my progress of the Delta-neutral portfolio I initiated for the April contracts.

    Also included is the mid-week market tone at the end of the report.

    For your convenience, here is the link to login to the premium site:

    NOT A PREMIUM MEMBER? Check out this link:

    Alan and the BCI team

    • Greg April 1, 2020 10:25 pm #

      Hi Alan,

      By Delta-neutral, do you mean you sold mostly at the money options?


      • Alan Ellman April 2, 2020 6:47 am #


        50% of my positions are bullish (move up when the market moves up) and 50% are bearish (move up when the market moves down). The latter is achieved by using inverse ETFs.

        This means that my portfolio holdings are unaffected no matter which direction the market moves and profits are made solely from option premium (using ITM calls only).

        Position management is critical; (as always) and there is risk in that we will not take advantage if the market moves up exponentially this month.

        This is the first time I am using this “Delta-neutral” approach and will let our members know how it turns out by the end of the April contracts. Challenging times requires innovative actions.

        Most retail investors just starting their option-selling careers may want to paper-trade until the market settles, volatility declines and risk is minimized.


  13. Leo April 18, 2020 1:59 pm #

    Hi Alan, I’ve recently discovered your website while looking for information on covered call strategies, and first of all I want to thank you for this incredible amount of insightful information and all the effort you have put into this site. I will go through your books after I finish reading some of your articles that I’ve found answering my specific questions. I also hope you could answer the following question:

    I’ve been using a covered call strategy focused on high-quality mega-caps (i.e., google, visa, intel) selling weekly in-the-money calls targeting 0.6%-1% gain with 3-5% cushion to breakeven – my goal is to have the trade unwind every week (exit either through assignment or through manual close right before expiration) and replicate similar trade for the following week; i am very risk-averse and want to minimize exposure to the underlying stock, thus i’m focused on itm as opposed to otm calls. As I think about the risk, i am most concerned with a gap down in the stock below my breakeven. In case the stock gaps down below my breakeven, I understand I can buy back the short call at a large gain and keep writing near-term itm or otm calls to keep reducing cost basis or have the stock eventually assigned at a price that limits/eliminates the loss. While such downside mitigating strategy should work over time, i’ve also thought about using a debit put spread as another way to manage downside protection here. My questions are (1) whether there is a more efficient way (in terms of potential loss exposure) to set up this strategy by using a synthetic long on the stock through a long deep itm call (i.e., poor mans covered call, via LEAPs or near-term expiration that is further out than short call’s expiration) and (2) whether the debit put spread is not a good method here for downside protection.

    For context, here is an example of a trade i would put on (prices as of 4/17 close): buy Visa at 169.54, sell 165 call expiring on 4/24 for 6.65 – max gain of 2.11/share or 1.2% with 3.9% cushion to breakeven; for put spread, buy 165 put and sell 162.5 put, for a debit of 0.53/share; combined, max gain of 0.9% with 5.1% cushion to breakeven. While I haven’t tested the combination of covered calls with put spreads yet, my assumption is that while the put spread does not fully protect me from losses on the long shares, it expands my downside cushion and could allow me to still profit in a scenario where the stock keeps falling, by closing the covered call when the stock moves down close to covered call breakeven and leaving the put spread on to potentially benefit from further fall in the stock.

    I look forward to hearing your thoughts, thank you!

    • Alan Ellman April 19, 2020 7:27 am #


      I’ve had my greatest success with traditional covered call writing, a strategy I have been using for more than 2 decades. I’ve tried all the other option strategies and couldn’t come close tp achieving the same level of success. That’s not to say that other strategies like debit put spreads won’t work better for others but I’m happy to share my personal experiences.

      Now, adding a debit put spread to a covered call trade is adding more money and 2 more positions to manage to the trade. Okay for some, not practical for others.

      Let me throw out 2 ideas to mitigate against gap-downs in addition to our exit strat4egy arsenal:

      1. Avoid the 4 weeks per year when Visa (or any company) reports earnings. Earnings disappointments are the main reason for gap-downs.

      2. Rather than a covered call trade, sell an OTM cash-secured put that meets your initial time-value return goal range. If exercised, an ITM call option can be written. This will afford protection prior to purchasing the stock and the ITM call strike will provide downside protection after purchasing the stock. If the put option is not exercised, you still receive your target premium.

      I refer to this strategy as the PCP (put-call-put) in my books and DVDs.


  14. Alberto August 16, 2020 12:36 pm #

    Many thanks for your answers. Regarding second point, I don’t understand several aspects:

    1) What do you mind when you say “meets your initial time-value return goal range”?

    2) If exercised, why do you write an ITM call instead of OTM call?

    Many thanks in advance.

    • Alan Ellman August 16, 2020 2:28 pm #


      1. When we set up our option-selling trades, we must first establish what our goal range is for the premium we are generating. For me, it’s 2% – 4% per month for near-the-money strikes. When selling OTM cash-secured puts, we must set aside cash in case the stock is “put” to us

      The broker will require us to set aside the [(put strike – put premium) x 100] per contract. Let’s say we sold a 1-month $50.00 strike for $2.00, we will be required to set aside $4800.00 per contract. If our goal is to generate an initial time-value return of 2% – 4% between $0,96 and $1.92 per-share.

      2. OTM strikes will almost never be exercised. If the OTM strike that was originally sold, becomes an ITM strikes if share price moves below the put strike price, it is likely to be exercised unless we take an exit strategy intervention.


  15. Ty October 5, 2020 7:32 pm #

    Hi Alan,

    I’m holding several dividend paying stocks in an IRA and have been selling covered calls on them. I’m thinking about adding a put spread to each of the trades to increase premium collected. I don’t mind having the shares called away as they are in the green already. Do you think this is a good strategy and how do I calculate my downside risk?

    I have RCL trading at $64.50
    Sold CC at 65 – $3.31cr
    Sold Put at 64 – $2.68cr
    Bought put at 60 – $1.26 debit

  16. John Ellis December 5, 2020 4:40 pm #

    Hello. I enjoyed the article and I like the purpose of the Calculator. I have just 1 comment: When interest is calculated it should be based on the total money used on the trade day and not just the stock price. For example, if the calculator used this technique the interest rate for “Initial Return No Price Change” would be 3.24% rather than 3.13%. All the other rates will be slightly different as well. I can send you my Excel spread sheet if you want to see the calculations.

    • Alan Ellman December 6, 2020 7:37 am #


      Are you referring to margin accounts? Please send me the spreadsheet so I can better understand your comment.

      Thank you.


      • John Ellis December 8, 2020 2:10 pm #

        Hello Alan, I’m not referring to margin. I used the “Break Even Price” to calculate returns because that is the total initial money used on the trade date (stk price – call prem + put price) rather than the stock price. Please let me know if I’m off course or if it makes sense to you. I attached my Excel 2007 spread sheet. If you can’t open it I can provide an Office 365 version. Thank you again for a fine article. John

        • Alan Ellman December 8, 2020 5:48 pm #


          It does make sense but it’s not the way I calculate initial time-value returns for covered calls. I hesitate to use the time-value for both returns plus to buy down our cost-basis. Others use your approach. The difference between the 2 approaches will not be major.


          • John Ellis December 9, 2020 1:35 pm

            Thank you Alan. I think your right – it does not make much difference and your way errs on the safe side. I think I get too wrapped up in the accounting details which don’t matter, especially if I buy the wrong stocks or use the wrong option strategy. I will be focusing more on that and less on unimportant details. Thank you for the help – John

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