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How to Use the BCI Portfolio Setup Spreadsheet to Craft Our Option-Selling Portfolios

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When establishing our covered call writing and cash-secured put portfolios, it is critical to factor in stock and industry diversification and cash allocation. Our BCI premium stock & ETF reports along with our Portfolio Setup Spreadsheet will be invaluable assets in achieving these goals.

BCI Premium Stock Report example

  • The details of this chart are difficult to read in a blog format, so I listed the industry breakdown on the right and the securities selected under the chart.
  • Use the BCI screening process to select elite-performing stocks that also factor in stock and industry diversification
  • Make sure price-per-share aligns with the cash available
  • Click here for a video description of how to use the BCI premium reports
  • Enter contract and trade dates into blue cells at top
  • Enter cash available and the # of stocks to be used, also into the blue cells
  • The spreadsheet will calculate the days to expiration (white cell, 11 in this example)
  • The spreadsheet calculates the guideline range for cash reserve need for potential exit strategy executions ($2000.00 – $4,000.000, in this case)
  • Enter the stock ticker & price-per-share into the blue cells
  • The spreadsheet will calculate the cash allocation ($14,285.71) per-position
  • The spreadsheet will calculate the # of shares that can be purchased based on cash allocation and round up or down
  • At the bottom of the spreadsheet, the total invested + cash reserve or shortage is computed
  • In this case, we are short $235.00 with no cash reserve, so an adjustment is needed
  • In the final calculation section, we will adjust AX down from 300 shares to 200 shares
  • We now have a reasonable portfolio setup using diversification and cash allocation
  • We also have a reasonable cash reserve of $5,069.00 for potential exit strategy opportunities
  • Print out this spreadsheet and use when ready to establish new positions for the upcoming contract cycle

Discussion

It is extremely important to incorporate diversification and cash allocation into structuring our option portfolios. Our BCI premium reports and portfolio setup spreadsheets are invaluable tools available for achieving results that will provide maximum opportunities to achieve the highest returns.



Alan Ellman’s Selling Cash-Secured Puts

Using stocks and stock options to develop a low-risk, wealth-building strategy for retail investors. Selling puts is a strategy similar to, but not precisely the same as, covered call writing. Mastering either strategy is a huge opportunity for retail investors to secure our financial futures. Mastering both will allow us focus in on the best investment choices depending on market conditions and personal risk tolerance.

FOR ADDITIONAL INFORMATION AND PURCHASE LINK, CLICK HERE.


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,

Thanks for your answers and sharing your wisdom and experience, Alan. It has been exciting to watch your influence and impact grow in the option trading professional community over the years.

Finding your website has been a blessing!

Cheers,

William

Upcoming events

1. BCI-Only Webinar (Zoom)

July 18, 2024

Register here.

Exit Strategy Choices After Exercise of Cash-Secured Puts

When we sell cash-secured puts, we are undertaking the contractual obligation to buy shares at the strike price by the expiration date. Typically, we only sell puts on elite-performers that we would be agreeable to own in our portfolio.

This presentation will analyze 4 potential exit strategy opportunities to consider should the put option be exercised. Information on the following strategies will be highlighted:

  • Selling the stock
  • Holding the stock in our long-term buy-and-hold portfolio
  • Write a covered call (PCP or “wheel” strategy)
  • Implement the Stock Repair Strategy

In addition to these strategies, the following topics will also be included in the webinar:

  • Option basics for selling cash-secured puts
  • Option basics for covered call writing
  • Real-life examples
  • Calculations using the BCI Trade Management Calculator (TMC)
  • Event super discount offer

There will be information offered to all levels of options trades, from beginners to advanced.

A live Q&A will follow the presentation. Attendees can ask any questions related to covered call writing or selling cash-secured puts.

Register here.

2. Investment Masters Symposium (live, in person event)

August 1, 2024

Presentation #1: 8:45 AM – 10:45 AM

Paris Hotel, Las Vegas

Register here.

Covered Call Writing & Selling Cash-Secured Puts to Generate Consistent Cash Flow

Basic & advanced principles for trading low-risk stock options with capital preservation in mind

This presentation will detail stock selection, option selection and position management, the 3 required skills to become elite covered call writers and put sellers. It will also include ultra-conservative approaches to these strategies using Delta and implied volatility to create statistically beneficial trades. Rules and guidelines will be discussed to take the emotions out of our trades resulting in high-probability positive outcomes.

Detailed analysis will be provided regarding how to craft our trades to the current market environment, personal risk-tolerance and strategy return goals.

A multi-tiered option-selling strategy which combines both covered call writing and selling cash-secured puts will also be examined. It is known as the PCP (put-call-put) or “wheel strategy.”

Attendees will be introduced to a one-of-a-kind trade management tool, the Trade Management Calculator, which is used to enter, manage and generate final realized and unrealized trade results.

The course is structured to benefit both beginner and advanced option traders, using real-life examples to enhance the learning process.

Presentation #2: All Stars of Option Trading Event

Register here.

3. Stock Traders Expo- live event in Orlando Florida

October 17 -20

Details to follow.

Alan speaking at a Money Show

15 Responses to “How to Use the BCI Portfolio Setup Spreadsheet to Craft Our Option-Selling Portfolios”

  1. Art June 8, 2024 4:08 pm #

    Alan,

    How do you decide if you should allow exercise of itm puts? What criteria do you use?

    Thank you.

    Art

    • Alan Ellman June 9, 2024 6:38 am #

      Art,

      Our exit strategy plan for such a situation must be in place before we enter our cash-secured put trade. If the put strike is expiring in-the-money, allowing exercise will depend on the following:

      1. There is no earnings report due in the next contract cycle.

      2. The underlying security still meets our system criteria for eligible securities (fundamental, technical & common-sense).

      3. The calculations for rolling the option meet our pre-stated time-value return goal range.

      If these factors are not met, we close the short put and do not take possession of the shares. This will usually result in a small loss.

      If we do take possession of the shares, we can now write a covered call, thereby utilizing the PCP (put-call-put or “wheel”) Strategy.

      Alan

  2. Howard June 9, 2024 2:11 am #

    Alan,

    A member of my investment club buys call options prior to earnings reports. He says he’s made some good money on these trades. What are your thoughts on this strategy approach?

    I’m doing just fine with covered call writing, but always looking to learn more.

    Thank you.

    Howard

    • Alan Ellman June 9, 2024 4:34 pm #

      Howard,

      Let’s start with this … I am on the sell side of options and always avoid earnings reports. Most who have followed BCI over the years, know this.

      This is not to say that buying call options prior to earnings is inappropriate for all investors. It may be a reasonable approach for those with high risk tolerance looking to generate substantial returns in a short time frame. The tradeoff is that the entire investment can be lost within seconds of a disappointing report.

      We must define our goals and understand our personal risk-tolerance, and these will lead us to the strategy most appropriate for our families.

      Alan

  3. Arnie June 9, 2024 12:49 pm #

    Alan,

    This morning I listened to one of your videos on the Greeks. Well done.

    My question is do you give more consideration to any 1 of these Greeks or do you evaluate them as a whole?

    Appreciate your thoughts.

    Arnie

    • Alan Ellman June 10, 2024 7:19 am #

      Arnie,

      Of the 5 option Greeks, I consider Delta, Theta and Vega the most important.

      Unless we are implementing one of our ultra-low risk strategy approaches, there is no need to access the specific Greek numbers, but it is critical to understand how these Greeks impact our premiums and define our trade risks.

      Alan

  4. Barry B June 9, 2024 11:27 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 06/07/24.

    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 Member’s pricing is locked into your current rate and you will never see a rate increase as long as the membership remains active.

    Barry and The Blue Collar Investor Team

  5. Alan Ellman June 10, 2024 7:23 am #

    NVDA reminder:

    Today NVDA splits 10-for-1.

    For those who own NVDA, you will now own 10x the number of shares at 1/10 the price. There is absolutely no change in the total value of the position.

    With NVDA trading at about $120.00 per share, as opposed to $1200.00 per-share, it may make this stock a more viable candidate for covered call writing or selling cash-secured puts (not a specific recommendation).

    Alan

  6. Herb June 11, 2024 1:23 am #

    hi Alan,

    I have a question.

    SayI enter into one pmcc and say out 2 yrs on the long – so have say monthly short sells- which i enter each time- say i do one each month.

    Then say a few weeks later i want to start another pmcc on a stock, do i need to buy the calculator again?

    Or can i save each trade .. and call them up when i need to update?

    Thank you

    Herb

    • Alan Ellman June 11, 2024 6:14 am #

      Herb,

      There is no need to purchase additional PMCC spreadsheets.

      Here is how to manage these situations:

      1. Always keep 1 blank copy of the PMCC calculator spreadsheet. name it (for example): PMCC_Blank.

      2. Let’s say you enter a trade where the short call expires on 6/21/2024 involving AAPL. Enter the trade into the blank spreadsheet. Then click on “file” and then “save as”. Name this particular spreadsheet (for example) PMCC_AAPL_6-21-2024. The blank spreadsheet will be preserved.

      3. Now, let’s say you decide to execute another PMCC trade with MSFT for the July 19, 2024 short call expiration. Enter the trade into the blank spreadsheet, file, save as and name it (for example) PMCC_MSFT_7-19-2024. Once again, the blank version is preserved.

      I use this same approach with the TMC spreadsheet and keep a
      TMC” folder on my desktop. After expiration, all spreadsheets are placed into that folder. The same can be done with the PMCC spreadsheets. Nice and neat!

      Alan

  7. Charlie June 11, 2024 2:23 am #

    Alan,

    So I’m reading the CEO book for the third time and about to dip my feet in the water after June 21.

    I’ve copied pg 62 (hitting a double and keeping the stock). After expiration Friday, you say that you can decide over the weekend what to do with the ETF. If you decide to sell it Monday morning, do you then enter that transaction somewhere on the Trade Management spreadsheet?

    Thanks

    Charlie

    • Alan Ellman June 11, 2024 4:01 pm #

      Charlie,

      Easy. Change the TMC entry from “final unsold” to “final sold” using the actual sale price.

      Alan

  8. Pat June 12, 2024 12:22 pm #

    Alan,

    I’m looking at VIRT at the moment.

    I see that the next earnings report is on Jul 25, 2024.

    Does that mean I should not bother with the monthly call options with the expiration of Jul 19 because this is before the earnings report?

    I do not have any VIRT options at the moment, but I do have 166 shares of it.

    Thank you,
    Pat

    • Alan Ellman June 12, 2024 5:25 pm #

      Pat,

      Since the July contracts expire (19th) prior to the earnings release, it is an eligible security from an earnings report perspective.

      With 166 shares, you can sell 1 contract. To sell 2 contracts, you would have to purchase 34 more shares.

      Alan

  9. Alan Ellman June 12, 2024 4:52 pm #

    Premium members:

    This week’s 4-page report of top-performing ETFs, along with our sample trade of the week, 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

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