Comments on: Protecting Our Covered Call Trades: Protective Puts Versus In-The-Money Strikes https://www.thebluecollarinvestor.com/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/ Learn how to invest by selling stock options. Fri, 30 Oct 2020 16:02:18 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/#comment-347029 Fri, 30 Oct 2020 16:02:18 +0000 https://www.thebluecollarinvestor.com/?p=19201#comment-347029 Market decline:

To our members who are in traditional covered call positions, please make sure all 20% guideline opportunities have been addressed.

I am currently 80% in cash as I have reported in our member reports and on this blog having sold deep OTM puts with Deltas of 10 or less. None of those puts are currently ITM but some are getting close.

For our members following this approach, keep in mid our 3% guidelines for share depreciation.

I am currently extremely defensive (hence the 80% cash decision) but even more bullish regarding the market once COVID-19 and election concerns are resolved.

With 0% interest rates through then end of 2023 likely, the opportunities will be huge… one man’s opinion.

It is critical to remain non-emotional in these challenging times.

Alan

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By: Nathan https://www.thebluecollarinvestor.com/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/#comment-346622 Thu, 29 Oct 2020 16:24:41 +0000 https://www.thebluecollarinvestor.com/?p=19201#comment-346622 Good afternoon Alan,

Today my limit order purchased back my call option,and I rolled down. I used the formula you provided in the articles you published on facebook to determine the strike price to roll down to. It worked great. Thanks for the new tool!

I like it because 1 standard deviation seems to be a good point where it’s not likely, most of the time, to be exceeded. And, at that point, there also looks to be a good return. I thought about what 2 standard deviations would give you as this would change the certainty from 68% to 95%, but my guess is the return would be very minimal at 2 standard deviations. Thanks again! Love the new tool.

-Nathan

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By: Alan Ellman https://www.thebluecollarinvestor.com/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/#comment-346558 Thu, 29 Oct 2020 12:07:42 +0000 https://www.thebluecollarinvestor.com/?p=19201#comment-346558 Earnings:

There are several key earnings releases today that may impact market direction in the near-term:

AAPL
AMZN
GOOGL
FB
SBUX

To name a few.

Ultimately, COVID-19 and election-related issues will write the final chapter.

Once these matters are managed and resolved successfully, we are well positioned. With near 0% interest rates through the end of 2023 (as per the Fed), the stock market is the only game in town.

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/#comment-346519 Thu, 29 Oct 2020 09:52:12 +0000 https://www.thebluecollarinvestor.com/?p=19201#comment-346519 In reply to Joanna.

Joanna,

There are 2 guidelines in the BCI methodology as when to sell the underlying security:

1. When price performance is significantly under-performing the S&P 500.

2. A percentage price decline from when the trade was initiated… 7% – 8% is a reasonable threshold. We added a 7% price decline stat in our new Elite-Plus calculator as shown in the screenshot below.

CLICK ON IMAGE TO ENLARGE & USE THE BACK ARROW TO RETURN TO BLOG.

Alan

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By: Joanna https://www.thebluecollarinvestor.com/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/#comment-346515 Thu, 29 Oct 2020 06:12:31 +0000 https://www.thebluecollarinvestor.com/?p=19201#comment-346515 Alan,

How does one create “hard cutoffs” for when to cut ones losses and get rid of a stock? Is it a percentage down, or technicals, or fundamentals?

This is my biggest challenge…when to throw in the towel…I hate unwinding everything only to see a rebound immediately after I get out…..any suggestions for solid cutoffs?

Thanks,
Joanna

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By: Alan Ellman https://www.thebluecollarinvestor.com/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/#comment-346329 Wed, 28 Oct 2020 21:09:50 +0000 https://www.thebluecollarinvestor.com/?p=19201#comment-346329 Premium members:

This week’s 4-page report of top-performing ETFs and analysis of the top-performing Select Sector SPDRs has been uploaded to your premium site. One and three-month analysis are included in the report. Weekly option and implied volatility stats are also incorporated.

The mid-week market tone is located on page 1 of the report.
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/protecting-our-covered-call-trades-protective-puts-versus-in-the-money-strikes/#comment-346222 Wed, 28 Oct 2020 14:32:18 +0000 https://www.thebluecollarinvestor.com/?p=19201#comment-346222 Trade Talks Interview

I just accepted an invitation to be interviewed by Nasdaq reporter, Jill Malandrino, on Monday November 2nd at 2 PM ET.

Recorded on Monday November 2, 2020 at 2 PM ET

Link will be provided after editing by Nasdaq.com

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