Comments on: Out-Of-The-Money Strike Prices: Pros and Cons for Covered Call Writing https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/ Learn how to invest by selling stock options. Thu, 30 Jun 2016 14:39:48 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/#comment-52172 Thu, 30 Jun 2016 14:39:48 +0000 /?p=6316#comment-52172 In reply to Justin.

Justin,

My accounts average at least 1% more per month more than my mother’s. You are 100% correct that there is more volatility, higher premiums and more risk but still manageable risk in my view as my target is 2-4% initial time value returns in my accounts and 1-2% in my mom’s.

Most of my professional career I traded this way while also a full-time dentist in a busy practice. I would suggest starting with ETFs and then deciding whether moving to individual securities is right for you. It’s much easier than performing root canal on # 15!

Much success to you.,
Alan

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By: Justin https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/#comment-52118 Thu, 30 Jun 2016 04:36:01 +0000 /?p=6316#comment-52118 In reply to Alan Ellman.

Hello, Dr. Ellman

I am an active endodontist and it’s great to see a fellow dentist is sharing the knowledge on investment. My question is whether your total return is any different than the total return on your mom’s account. I am pretty sure the return in your account is more volatile since you have more individual stocks and they do have higher IV and more risks. Also, do you feel it’s worth spending time on researching companies for underlying stocks and stuff for people with a day job?

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By: owencpa https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/#comment-6218 Fri, 29 Jun 2012 19:52:29 +0000 /?p=6316#comment-6218 Alan sent me an email indicating that some people have been asking about using weeklies for covered call writing. The weeklies are problematic.

If you are dealing with a reasonably priced stock, there is pretty much not enough premium to make it worthwhile. If you are dealing with a stock with a decent option premium, you are talking about the $500 – $700 monsters like Apple, Google and Priceline.

Example: 100 shares of LULU at 3;40PM on 6/29 is $5,931. You can sell a JulWk1 $60 call (exp 7/6) for $0.85. After you subtract $15-$18 for broker’s fees, there isn’t much left for you.

Now, an Apple JulWk1 $590 call will get you $4.10, but you have to put up $58,255 to buy the stock.

The biggest danger of the weeklies is that there is little margin for error if the price turns. With only 7 days to begin the transaction you do not have enough time to “wait a day or two” to see if it fixes itself.

A slow nickel is still safer than a fast dime. If you can turn 1%-2% per month you are doing better than almost everyone else. Remember the Wall Street rule: Bears roar, bulls stampede and pigs get slaughtered.

Call a stock broker. Teach him how to make money.

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By: Alan Ellman https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/#comment-6217 Fri, 29 Jun 2012 15:53:53 +0000 /?p=6316#comment-6217 In reply to Phil.

Phil,

AEP DOES meet the BCI criteria for the high dividend yield strategy. Here are the current stats for your stock:

Yield = 4.8% (4-8% required)

6-month RS rating = 62 ( >50% required)

Years paying dividends = 103 years (consistency!)

# annual payments = 4

Last ex-dividend date = 5-8-12

As a matter of fact, the BCI team is currently putting the finishing touches on our next quarterly high dividend yield report. It should be uploaded to your premium site in the next few days. Premium members will receive an email when it is available.

Alan

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By: Phil https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/#comment-6213 Fri, 29 Jun 2012 11:01:21 +0000 /?p=6316#comment-6213 Alan,

I have a significant number of shares of AEP in my account and was wondering if this would be a good candidate for your high dividend yield strategy (page 437 of your latest book)? Great book!

thanks.

Phil

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By: Alan Ellman https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/#comment-6209 Thu, 28 Jun 2012 21:11:31 +0000 /?p=6316#comment-6209 Premium members:

This week’s 6-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site.

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

Reminder: The $100 discount for the NEW DVD Program and the DVD Program with the new book (“Encyclopedia…”) ends Saturday June 30th for ALL members. Premium members are entitled to an additional 10% discount. Be sure to enter the Blue Collar Store from your premium site.

Alan and the BCI team

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By: Alan Ellman https://www.thebluecollarinvestor.com/out-of-the-money-strike-prices-pros-and-cons-for-covered-call-writing/#comment-6207 Thu, 28 Jun 2012 10:49:50 +0000 /?p=6316#comment-6207 Running list stocks in the news: QCOR:

On April 24th, QCOR reported an outstanding 1st quarter earnings report. Earnings beat estimates by 16% and were up 222% year-to-year. Revenues rose by 161% well above estimates. This was the 4th consecutive positive earnings surprise with an average “beat” of 22.6%. QCOR reported cash on hand of $223.7 million with NO long-term debt. On May 15th, QCOR announced a continuation of its share buy-back program, enhancing the value of investor shares. All this has resulted in a new 52-week high price on June 26th. Our premium report shows an industry segment rank of “B” and a beta of 1.01.

Alan

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