Populating our covered call writing and put-selling portfolios during earnings season can be challenging but nothing we can’t overcome. This article will provide ideas as to how to craft our portfolios using elite-performing securities while still avoiding the risk of earnings reports (ERs) using our BCI screening reports.
Resources to consider
- Stocks that report earnings in the 1st week of a monthly contract
- Stocks with weekly options
- Stocks that do not report in the current contract cycle
- Exchange-traded finds (ETFs)
Premium Stock Report (partial screenshot) crafted on 10/21/2022 for the start of the November 2022 contracts
BCI Premium Stock Report 10-21-2022
Note the following:
- Stocks above the red line report in the 1st week of the November contracts. These securities become eligible after the report passes and will still generate 3 – 4 weeks of time-value premium
- Green arrows point to stocks with weekly options. We can sell Weeklys that months and just avoid the 1-week of the ER
- All stocks in gold cells report during the November contracts
Eligible stocks during the November contracts
Premium Stock Report Showing Eligible Securities
The purple arrow shows eligible stocks that do not report during the November contracts and open for consideration.
Exchange Traded Funds (ETFs)
ETFs do not report earnings. Therefore, all of these eligible securities are available for our consideration even during earnings season. Our typical reports will have between 15 and 30 listed. Here is a partial screenshot of the ETF Report crafted on 10/26/2022 after market close:
Exchange Trade Funds Report for the November 2022 Contracts
Discussion
During earnings season our pool of eligible underlying securities for our option portfolios will be somewhat limited. We can overcome this challenge by using stocks that report early in the contract once the reports pass, stocks with weekly options, stocks that do not report in that cycle and ETFs. At BCI, we understand that there will be hurdles we must face, but counter that fact with reasonable solutions.
Premium Member Benefits Video
This is a great time to join our premium member community with its stock screening and educational (over 250 videos) benefits. We offer more benefits than ever before. For information, click here.
For video explanation, click here.
New ETF video
Last week, we updated our video explanation of our premium member weekly ETF Report. This report can now be used to implement our recently released streamlined approach to covered call writing, the CEO Strategy.
Click here for a link to this video
Click here for information on the BCI CEO Strategy
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:
Alan,
I am very thankful for your thoughtful reply.
You are a great teacher.
I am trading CC past couple of years mostly DOW 30 stocks.
Exit strategy is always a great challenge to me and now I found a mentor in you.
Able to understand the need of proper guidance and getting it now.
Thanks to BCI community.
Venkat
Upcoming events
To request a private webinar for your investment club, hosted by Alan & Barry: info@thebluecollarinvestor.com
1. Money, Markets, & Monetary Policy Virtual Expo
April 11th, 2023
2 PM – 4 PM ET
Master Class (paid event to The Money Show)
In depth presentation on selling cash-secured puts
Registration is free to the entire show but my event is considered a Master Class and The Money Show is charging for these 2-hour classes.
2. Wealth365 Summit
April 18th
10 AM – 11 AM ET
Covered Call Writing Dividend Stocks to Create a 3-Income Strategy
Covered call writing is a low-risk option-selling strategy that generates weekly or monthly cash-flow. By mastering the skill of strike price selection and adding dividend distributions, a potential 3-income strategy can be crafted with a goal of beating the market on a consistent basis.
Bonus topic: An introduction to the BCI streamlined approach to covered call writing creating a more user-friendly and time-efficient path to this low-risk option-selling program.
Topics covered in this webinar include:
- Strategy analysis
- Option basics
- What is covered call writing?
- Dividend distribution
- Stock selection
- Option selection
- Trade management
- Q&A
Real-life examples will be highlighted with Dow 30 stocks using option-chains and calculation spreadsheets.
Attendees will have the opportunity to participate in written Q&A during the entire webinar.
3.BCI total community webinar plus Q&A
Covered Call Writing: A Streamlined Approach (CEO Strategy introduction)
May 2023
Details to follow.
4. Your Mid-Year Portfolio Review Virtual Expo
June 27th – 29th, 2023
Specific time, date, topic & description and registration link to follow.
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Alan, Barry,
I think I’m reporting a good news scenario but I just wanted to get your thoughts. I’m trading xlc in the ceo strategy.
I’m just going over the mid contract options using the “what now” calculator. After filling in the blanks with all the info (selling the stock, buying back the option) I’m sitting on a 2.90% gain annualized 110% gain.
Do you have a mid contract percent that you would consider satisfying or do you just let something this good just slide by.
My other etf’s are just as good if not better. I’m just getting started here and I need just a small nudge in the right direction.
Thanks in advance,
Brad
Brad,
First, congratulations on your recent success.
Should we decide to integrate and expand the MCU exit strategy into our CEO approach to covered call writing, here are important rules and guidelines as detailed in my books and video courses:
1. When share price accelerates significantly, as with XLC, leaving the out-of-the-money call strike now in-the-money, we must measure the time-value cost-to-close.
2. The BCI Trade Management Calculator (worksheet tab on bottom of the covered call writing spreadsheet), the Elite Plus and the Elite Covered Call Writing Calculators all have the “Unwind Now” tab to determine this statistic.
3. If we can generate at least 1% more than this time-value cost-to-close with a new security by current contract expiration (4/21/2023, as an example), we can implement the MCU strategy.
4. Typically, we will use a different security for the 2nd income stream with MCU. Use the most recent premium member ETF Report to seek a replacement ETF.
5. Here is a link to an article published in 2019 on this topic:
https://www.thebluecollarinvestor.com/hitting-a-double-or-mid-contract-unwind-exit-strategy-which-exit-strategy-did-i-just-use/
Keep up the good work.
Alan
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 03/31/23.
Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them on The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:
https://www.youtube.com/user/BlueCollarInvestor
Reminder: Premium members are grandfathered into your current rate and will never see a rate increase as long as the membership remains active.
Best,
Barry and The Blue Collar Investor Team
barry@thebluecollarinvestor.com
Alan,
I really like your new ceo strategy and started with the April monthly contracts. If we are entering a new bull market, would you change your initial return goal from 1-2% which is in your book to a different range.
Thank you.
Rubin
Rubin,
1% – 2% is a guideline. You will note that, in my book, the initial time-value returns for certain positions were slightly higher than 2%. I always aligned with the minimum 1% monthly return.
In a bull market environment, we can stay closer to 1% and allow for greater returns on the stock side of the trade, as those strikes will be deeper out-of-the-money.
Alan
Hello again Alan.
I just viewed ask Alan video number 197.
I have same question about rolling up in mid or early contract if price of stock increases.
You have said you prefer mid contract unwind where you sell underlying and buy new stock rather than roll up on same stock.
I believe you said reason was profit taking which I don’t understand. Please explain.
Barry
Barry,
When implementing covered call writing and share price rises exponentially, leaving the original strike now deep in-the-money, the time-value component of the premium will approach (but not reach) $0.00.
Now, should we roll-up or consider the mid-contract unwind (MCU) exit strategy? I have stated in my books/videos, that I prefer MCU due to my concerns regarding profit-taking. This means that investors who have large unrealized gains in these recently appreciated securities, may want to convert to realized gains and sell their shares thereby causing share price decline.
With MCU, we can close our positions with very little time-value cost-to-close and enter a new position with a different underlying security to then initiate a 2nd income stream in the same contract cycle. This is why we must also have a cash reserve to initiate these exit strategies.
Alan
Premium members:
This week’s 4-page report of top-performing ETFs has been uploaded to your premium site.
The Select Sector SPDR section is now crafted to align with our streamlined (CEO) approach to covered call writing.
The report also lists Top-performing ETFs with Weekly options, mid-week market tone as well as the implied volatility of all eligible candidates.
Premium member video link:
https://youtu.be/EXMO-KwZuJs
For your convenience, here is the link to login to the premium site:
https://www.thebluecollarinvestor.com/member/login.php
NOT A PREMIUM MEMBER? Check out this link:
https://www.thebluecollarinvestor.com/membership.shtml
Alan and the BCI team
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 04/06/23. We were able to upload this report earlier because the market was closed on Friday, 04/07/23.
Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them on The Blue Collar YouTube Channel. For your convenience, the link to the BCI YouTube Channel is:
https://www.youtube.com/user/BlueCollarInvestor
Reminder: Premium members are grandfathered into your current rate and will never see a rate increase as long as the membership remains active.
Best,
Barry and The Blue Collar Investor Team
barry@thebluecollarinvestor.com