Comments on: Executing Covered Call Trades: The Buy-Write Combination Form. https://www.thebluecollarinvestor.com/executing-covered-call-trades-the-buy-write-combination-form/ Learn how to invest by selling stock options. Wed, 21 Nov 2012 13:22:36 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/executing-covered-call-trades-the-buy-write-combination-form/#comment-7835 Wed, 21 Nov 2012 13:22:36 +0000 /?p=7182#comment-7835 Running list stocks in the news: MYGN

On November 5th, Myriad Genetics reported a stellar 1st quarter earnings report with earnings-per-share up 24% year-to-year beating estimates by 12.5%. Revenues increased by 21%. This was the 7th consecutive positive earnings surprise with an average beat of 9.1%
MYGN raised its outlook for fiscal 2013 reflecting a growth rate of 15-18%

Our premium watch list shows an industry segment rank of “A” and a beta of 0.94.

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/executing-covered-call-trades-the-buy-write-combination-form/#comment-7826 Tue, 20 Nov 2012 18:54:21 +0000 /?p=7182#comment-7826 In reply to Kathy.

Kathy,

In the BCI methodology, downside protection refers to the protection of the intial profit (time value of the premium). It is NOT the same as the breakeven. Here’s an example:

Stock price = $32

$30 call = $3 (breakeven is $29)

Initial profit (ROO) = 1/$30 = 3.3% (use the intrinsic value to “buy down” the cost basis from $32 to $30)

Downside protection = $2/$32 = 6.3%

This means that our 3.3%, 1-month return is guaranteed as long as the share price dows not depreciate in value by more than 6.3% by expiration Friday.

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/executing-covered-call-trades-the-buy-write-combination-form/#comment-7793 Mon, 19 Nov 2012 00:00:39 +0000 /?p=7182#comment-7793 In reply to Susan.

Susan,

Historically, low-beta stocks tend to outperform in bear markets and high-beta stocks tend to outperform in bull markets. Although we use beta as a secondary consideration, it is still a valid and useful tool. A FREE resource is:

1- http://finance.yahoo.com/

2- Type in ticker and “get quote”

3- Under “Company”, hit “Key Statistics”

4- Beta under “Trading Information”

Alan

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By: Kathy https://www.thebluecollarinvestor.com/executing-covered-call-trades-the-buy-write-combination-form/#comment-7790 Sun, 18 Nov 2012 23:23:07 +0000 /?p=7182#comment-7790 Alan,

What is the formula you use in your calculator for downside protection and please explain. Thank you.

Kathy

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By: Susan https://www.thebluecollarinvestor.com/executing-covered-call-trades-the-buy-write-combination-form/#comment-7782 Sun, 18 Nov 2012 13:45:25 +0000 /?p=7182#comment-7782 Alan,

In this article you mention low beta stocks. Where can I get beta information and how do you use it? Thanks a lot.

Susan

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By: Barry B https://www.thebluecollarinvestor.com/executing-covered-call-trades-the-buy-write-combination-form/#comment-7767 Sun, 18 Nov 2012 01:31:42 +0000 /?p=7182#comment-7767 Premium Members,

The Weekly Report for 11-16-12 has been uploaded to the Premium Member website and is available for download.

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 BCI YouTube Channel link is:

http://www.youtube.com/user/BlueCollarInvestor

Since we are still in Earnings Season, be sure to read Alan’s article, “Constructing Your Covered Call Portfolio During Earnings Season”. You can access it at:
http://www.thebluecollarinvestor.com/constructing-your-covered-call-portfolio-during-earnings-season/

Best,

Barry and The BCI Team

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