Comments on: Moneyness of Options: Why Call and Put Premiums for the Same Stock, Strike and Expiration can be so Different/ CONTEST DEADLINE IS NOVEMBER 30th https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/ Learn how to invest by selling stock options. Thu, 03 Dec 2015 15:15:53 +0000 hourly 1 By: Barry B https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/#comment-24968 Thu, 03 Dec 2015 15:15:53 +0000 http://www.thebluecollarinvestor.com/?p=12688#comment-24968 In reply to Barry B.

OOPS!

Make that 12/4/15…

Barry

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By: Barry B https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/#comment-24967 Thu, 03 Dec 2015 15:14:58 +0000 http://www.thebluecollarinvestor.com/?p=12688#comment-24967 In reply to Bill.

Bill,

If you believe that a stock will run up (based on your analysis) and you will miss the upside with a covered call trade, another idea you might want to consider is to buy upside calls on those stocks. This way, you will be able to focus on the covered call…your primary strategy…while participating in upside movement. You will need to watch the trade so you can sell the call if the stock drops or you get close to expiration.

A word of caution, you will need to be careful because if you are wrong, the upside call premium will lower your covered call return.

Best,

Barry

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By: Barry B https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/#comment-24966 Thu, 03 Dec 2015 15:01:49 +0000 http://www.thebluecollarinvestor.com/?p=12688#comment-24966 Premium Members,

The new StockScouter report was just published. Based on the new rankings, two stocks went from passing to failing the Risk/Reward rankings. Those stocks are:

NHTC – Went from n/a to 4
QIHU – Went from 5 to 4

The new report for 12/4/14 will reflect the new Risk/Reward rankings.

Best,

Barry and the BCI Team

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By: Bill https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/#comment-24965 Thu, 03 Dec 2015 12:37:53 +0000 http://www.thebluecollarinvestor.com/?p=12688#comment-24965 In reply to Jay.

Alan and Jay,

Thanks for your detailed answers. I’m still learning and value the insight from more experienced investors.

Bill

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By: Jay https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/#comment-24961 Thu, 03 Dec 2015 02:03:29 +0000 http://www.thebluecollarinvestor.com/?p=12688#comment-24961 In reply to Bill.

Bill.

There is an old saying: “If your only tool is a hammer all your problems will look like nails.”

Covered calls are not our only hammer, as Alan confirmed in his excellent reply,

You asked one of the great questions we all grapple with: when and to what degree do we use covered calls?

Everyone’s answer will vary to fit their investing temperament. I write calls on all dividend stocks but never more than 50% of growth stocks like NTES. It makes my blood boil to miss great run ups because I am covered! But others will see it differently.

And, as Alan suggested, we trade in the now. The future is a blank canvas. So for me taking the elevated premium that comes with growth stocks at the same time I leave half or more shares uncovered to run works well. – Jay

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By: Alan Ellman https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/#comment-24960 Wed, 02 Dec 2015 22:07:40 +0000 http://www.thebluecollarinvestor.com/?p=12688#comment-24960 Premium members:

This week’s 8-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site. The report also lists Top-performing ETFs with Weekly options.

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

http://www.thebluecollarinvestor.com/member/login.php

NOT A PREMIUM MEMBER? Check out this link:

http://www.thebluecollarinvestor.com/membership.shtml

Alan and the BCI team

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By: Alan Ellman https://www.thebluecollarinvestor.com/moneyness-of-options-why-call-and-put-premiums-for-the-same-stock-strike-and-expiration-can-be-so-different-contest-deadline-is-november-30th/#comment-24959 Wed, 02 Dec 2015 19:11:02 +0000 http://www.thebluecollarinvestor.com/?p=12688#comment-24959 In reply to Bill.

Bill,

If we have a stock that we feel may take off like this one did, there are a few things we could do:

1- Move the stock into our longer-term buy-and-hold portfolio, perhaps setting up an 8- 10% trailing stop loss order.

2- If hundreds of shares are owned, sell options on half and hold the other half as a longer-term holding.

3- Sell deeper out-of-the-money calls, generating lower initial returns but allowing for greater share appreciation (this would be my go-to strategy).

We are viewing this trade now with hindsight…when the stock was $140 we didn’t know it would increase in value this much and this fast.

So happy for you.

Alan

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