In the BCI methodology, we never sell a covered call or cash-secured put on a stock with a projected earnings report date prior to contract expiration. When selling our traditional monthly options this means we are only able to use a particular stock for eight months of the year because most companies report earnings on a quarterly basis. This is rarely a problem because we have so many elite companies to choose from, our watch lists should have between forty and sixty eligible candidates each month in addition to exchange-trade fund candidates. As options have gained in popularity over the past several years more and more products have been made available including weekly options. Weeklys options are options that are listed to provide expiration opportunities every week. Weeklys are typically listed on Thursdays and expire on Fridays, provided that such expirations were not previously listed (i.e, Weeklys are not listed if they would expire on a third Friday). Many Weeklys are listed several weeks prior to expiration. Short-term option-sellers can take advantage of Weeklys to use a favored stock forty eight weeks out of a calendar year, avoiding that security only the four weeks of the year when earnings are projected to report.
How to use the BCI Premium Watch List to Locate Stocks with Weeklys
Note the following:
- The red arrow at the top of the chart shows the column that identifies stocks with weekly options showing a “Y” for “yes”
- The three rows at the top in “gold” color show the stocks that have passed all our screens but have projected earnings report due out in the current contract (not calendar) month
- PANW and AMBA both have Weeklys associated with them and therefore can be used in three of the four weeks of the current contract period
- The red arrow in the middle of the screenshot shows the July 16th projected earnings report date for SWKS, a stock on our Premium Watch List for forty one weeks at the time I created this screenshot
Viewing an Options Chain for Weeklys
Note the following:
- The June contracts expire on June 19th
- The July contracts expire on July 17th, the day after SWKS is projected to report earnings
- The screenshot shows the availability of some lower strike Weekly June 26th options for SWKS. These expire on June 26th.
- Other choices that will be available are the July 3rd and July 10th Weeklys
- We will avoid the July 17th monthly option and continue (after the earnings report passes) with Monthlys until the next earnings report date approaches
A significant percentage of stocks that are eligible for short-term option-selling have weekly options associated with them. We can then use these expiration dates to leverage the underlying securities up to forty eight weeks per year using our option-selling strategies.
Shipping of The Complete Encyclopedia for Covered Call Writing has begun
All pre-orders placed prior to September 4th have been shipped. The remaining pre-orders will be sent by the end of this upcoming week. All subsequent orders will be shipped within two business days. Your amazing response to this new book was a very pleasant surprise to me and my team. Thanks for your support.
September live appearances
1- St. Louis, Missouri
September 15, 2015
6:30 PM – 9 PM
September 16, 2015
New York Stock Exchange
4:10 PM – 5:00PM
Global equity markets remained volatile but actually were up for the week despite nervousness about China’s slowing economy and the much-anticipated US Federal Reserve policy meeting next week. The VIX index traded in a fairly tight range of 23–27, indicating less market volatility than in the past few weeks. This week’s reports:
- Non-farm job openings rose more than expected to 5.75 million in July, the highest number since December 2000. However, the number of hires in July fell to 4.98 million from 5.18 million
- The University of Michigan consumer sentiment index dropped to 85.7 in September from 91.9 in August. This was the lowest level in a year and well below expectations for 90.3
- US consumer debt rose at a 6.7% annual rate in July, slightly below expectations but extending the run of modest monthly increases in overall consumer credit to almost four years. Recent gains in credit card debt could be a sign of growing confidence amid lower gasoline prices and a healthier job market.
- The National Federation of Independent Business index of small business optimism rose slightly in August, suggesting that the month’s financial market turmoil had little impact on US small businesses
- The US producer price index was unchanged in August and fell 0.8% year over year, the seventh straight 12-month decrease. Lower crude oil prices and the strong US dollar have held down producer price increases
- Initial jobless claims decreased 6,000 to 275,000 for the week ended 5 September Claims have been below 300,000 for 27 straight weeks, the longest streak in more than 40 years
- Continuing claims rose 1,000 to 2.26 million for the week ending August 29th
For the week, the S&P 500 rose 0.36% for a year to date return of (-) 2.93%.
IBD: Uptrend under pressure
GMI: 0/6- Sell signal since market close of August 24, 2015
BCI: This site remains bullish on the US economy and encouraged by declining volatility but still cognizant of events in China as well as the Fed watch. At this time, I am retaining all shares currently in my portfolios and planning to start selling options again for the upcoming October contracts.
Wishing you the best in investing,
Alan ([email protected])